Buying a new car on finance is very common throughout the world. In the UK alone, nearly 90% of new car deals are made on some kind of finance, which means most of the vehicles we see on the road have an outstanding loan on them.
It also tells us that the driver running the car does not own the vehicle, and it belongs to the finance company. Although some car financing schemes bound you to sell the car, some people still sell it.
It is illegal and can put you in trouble, especially if you have wittingly purchased the vehicle with an outstanding loan. So, the question is:
How to avoid buying a car with outstanding finance on it?
The simplest way to go about it is to get a free car history check. However, that might not reveal all the details about the car you are going to buy. Therefore, we advise you to get a full vehicle check from a genuine service such as Car Analytics.
It will cost you a little but will provide information on the outstanding loan. Moreover, you will be able to know if it has been written-off, stolen, scrapped, imported, or exported.
You will also find out about its previous owners, mileage, and other essential details. Also, you can check if a vehicle is taxed or not. If not, you can ask the seller to tax the car first.
Bear in mind some buyers may come with their own history check report. It could be fake, so better get your report from a reliable online service.
What to do if you buy the car with an outstanding loan?
If you have purchased the used car and had honestly no clue of its unsettled loan, it means you own ‘good title’ and can have it. However, the finance firm wants their money back and will do their best to prove you guilty.
To handle this matter, the best way is to file a formal complaint with the finance firm and get in touch with Citizens Advice and the Financial Ombudsman. You may also need to consult with a solicitor.
What to do if you know about the outstanding loan before the purchase?
You should not purchase it at all costs. If you do it, you are just as guilty as the seller is and will not be able to prove your innocence to the finance company. In such a case, the firm will recover the vehicle from you.
On the other hand, if you genuinely like the car with an outstanding loan, you should ask the seller to pay off their debt and give you the proof of clearance (do not hesitate to ask the finance company about it).
And if you’d like any help or you’re ready to access your free vehicle report, be sure to reach out and get in touch. We’re happy to respond to any queries you may have!