If you inadvertently buy a car with an outstanding finance agreement attached to it, this can cause you a great deal of hassle. After all, the seller would not have had the lawful right to sell the car to you in the first place – and it would remain the property of the company that facilitated the finance agreement.
Running a simple outstanding finance check before buying a car can help you avoid this difficult scenario.
In this guide, we will list and explain the various tools that can help you determine whether a car has outstanding finance. We’ll highlight the information that an outstanding finance check report may contain. Finally, we’ll cover the process to follow if you discover that you have bought a car with a finance agreement attached.
You can find out whether a car has outstanding finance by requesting a report from an online car check service.
Providing you have the vehicle’s registration number to hand, online DVLA checker tools should be able to tell you what you need to know.
Whilst many of these tools will disclose selected details free of charge, it’s likely that you’ll have to pay a small fee to receive a full report. However, if you have legitimate concerns that a vehicle you want to buy (or have already bought) has outstanding finance, it’s worth paying for your peace of mind.
An outstanding finance check report will tell you:
Although our free car check tool will not provide you with details of any finance agreements associated with a car, it will tell you important information such as:
This can provide a good basis for you to investigate whether a seller is genuine.
The only way to find out exactly how much finance is left on a vehicle is to get in touch with the credit lender.
However, credit lenders are generally bound by confidentiality agreements that prevent them from releasing specific details concerning outstanding finance to anyone other than the agreement holder.
If a car you have checked but not yet purchased has outstanding finance, you should contact the seller and advise them to settle the finance agreement before selling the vehicle. You should not purchase a car that has outstanding finance until it is settled.
However, if you have already purchased a car with an outstanding finance agreement, you should inform the credit lender, as the vehicle still legally belongs to them.
If you discover that the car you recently bought has outstanding finance and you had no idea, you may be able to keep it under ‘good title’.
(This means that you bought the car with no knowledge of this problem and had no intention of purchasing a car unlawfully.)
Of course, the finance company will expect their money back. So, you should co-operate with them fully and be prepared to provide details of the sale to assist with their efforts to retrieve it.
It is illegal to sell a car with an outstanding finance contract, as the vehicle is legally the property of the lender. You cannot sell a car privately until any outstanding finance has been settled.
If you want to sell a car with outstanding finance, you’ll need to pay the remaining balance to your lender first – or find a buyer that will settle the balance on your behalf. (Here at webuyanycar, we can settle any outstanding finance on your vehicle.)
If you're in the process of buying a car with outstanding finance and suspect or discover that a car you wanted to buy is still subject to an outstanding finance agreement, don’t purchase it.
The vehicle still belongs to the finance company, meaning the current owner doesn’t have the right to sell the car privately. (If you knowingly buy a car with an outstanding finance agreement, you are technically handling stolen goods.)
You can part exchange a car on finance if you’re in positive equity.
This means that your car is valued at more than the sum of the outstanding credit. For example, if you’ve paid £8,000 towards the car but it is valued at £10,000. In this instance, you could part exchange your car and receive £2,000 in equity.
The dealer must then settle the remaining balance on your finance agreement - and your £2,000 return can be put towards a new vehicle.
For a more detailed explanation of this topic, please see our guide ‘Can you part exchange a car on finance?’