How to Check Whether a Car Has Outstanding Finance
What is Outstanding Finance on a Car?
When you purchase a car, you can either buy the car outright or use a form of finance agreement. The finance agreement gives you the option to borrow money from a lender so you can pay for the car. The finance deal will usually start with a deposit followed by monthly payments to the car dealer. When all the payments have been completed you become the legal owner of the car. Until you have paid your final payment, you still have outstanding finance on the car. Therefore, you are not permitted to sell the vehicle.
A lender will usually consider the finance outstanding until the final day it is settled. Once the final payment or any remaining balance is paid in full, the car’s record will be updated, and the outstanding finance will be cleared. It can sometimes take a few working days for the systems that keep a record of outstanding finance to update.
The 3 Most Popular Ways of Financing a Vehicle Are:
Usually, it’s HP or PCP agreements that will leave a marker on the vehicle’s HPI record showing it has outstanding finance. Once the finance has been paid off the marker will be removed from the vehicle’s HPI record.
Personal Contract Hire (PCH) provides an alternative method. With PCH, you lease your vehicle meaning you are responsible for its roadworthiness, but you do not legally own the vehicle.
Can You Sell a Car with Outstanding Finance?
Whether you can sell your vehicle or not comes down to what time of financing you have.
Regarding HP and PCP deals, you can sell your vehicle if you pay off the remainder of the deal. You will need to get in contact with your lender and fix a settlement fee. Once you have paid off the finance you will be free to sell the car.
Regarding PCH finance, you are not allowed to sell the vehicle. This is because the vehicle is leased to you, meaning you are renting the car and it is not under your ownership.
Regarding Personal Loans, you can sell your vehicle even with outstanding finances you haven’t yet paid. This is because you have bought the car, even if the money has been loaned to you. You are still liable to make payments to your lender after the car is sold if you have outstanding finance.
How to Check if a Car Has Outstanding Finance
There are many services available, designed to check for outstanding finance prior to the purchase of a car. These services are usually affordable but be aware that services claiming to provide a free HPI check are not genuine and will not provide you with the information you need to protect you from scams. Some car dealers offer an inclusive HPI check for the vehicle you are looking to purchase for extra peace of mind upon completion of the sale.
When buying from a private seller it’s always important to ask about any outstanding finance on the vehicle before agreeing to buy. The seller may inform you that the finance has just been paid off on the vehicle or will be paid in the next couple of days. This information is useful as outstanding finance checks can take a few days to update.
What if You Buy a Car with Outstanding Finance?
If you buy a vehicle with outstanding finance which you had no prior knowledge of you have a right to keep the car under the ‘good title’ rule. The finance company will want the outstanding balance settled but it is up to them to prove that you don’t have a ‘good title’ to the vehicle.
What if the Finance Company Contact You?
If you have been sold a vehicle with outstanding finance, you may be contacted by the finance company. It’s up to the finance company to prove you are not in good faith opposed to you proving anything. If you wish to send the finance company evidence to prove you purchased the car in good faith you may want to include:
- The name and address of the person you bought the car from
- The date you bought the car
- Details of how the car was advertised (including a copy of the advert if you it)
- Any receipts of purchase
- The amount you paid
Where possible, keep a record of all correspondence between yourself and the finance company as it may be required if the case cannot be resolved.
What Steps to Take Next
It’s always possible that the finance company will not accept your explanation for purchasing the vehicle. In some cases, the finance company will report the vehicle as stolen. As a result, the car could be taken away from you. If you believe you have ‘good title’ to the car and you’re unable to resolve the issue, AWH Solicitors can help you through the next steps to get your car and money back.
Taking Action with AWH Solicitors
If the finance company is not accepting that you purchased the car in good faith our team of solicitors can help you claim back the losses. If you don’t manage the situation correctly you could lose both your money and your car. Our solicitors can provide the legal advice needed to make sure you’re not left without your car or money.Get in touch