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What Happens If I Buy a Car With Outstanding Finance?

Almost 90% of private buyers use finance to buy their next car, which means that many vehicles on the road still have outstanding finance owed. That in itself isn’t an issue and is actually a relatively normal occurrence. 

A little tight on time? Check out Kathryn explaining what happens if you buy a car with outstanding finance here 👇


But what happens if you buy a car that still has outstanding finance? Fortunately, most types of car financing don’t allow for cars to be sold if there are outstanding amounts owed on them. However, every now and then, a few can slip through the cracks, especially when people decide to sell their car privately.

In this guide, we’re breaking down what happens when you buy a car with outstanding finance and what you should do to avoid the scenario altogether. So read on, and find out everything there is to know about buying a car with outstanding finance on it. 

How can you buy a car with outstanding finance?

Someone trying to sell a car with outstanding finance to a dealership will likely come up against a brick wall. Dealerships usually have checks and balances in place to ensure they spot anything dodgy, such as a car with outstanding finance. 

Therefore, the more common way to purchase a car with outstanding finance involves buying the vehicle from a private seller. Even if you did buy a car privately, you should conduct an HPI check to see the vehicle’s previous history. However, should you forgo the HPI check, you could end up buying a car with outstanding finance. 

What happens if I buy a car with outstanding finance?

There’s good news and bad news if you buy a car with outstanding finance. A “good title” means that you have the right to keep the vehicle if you were unaware of the previous finance owed when you bought it. Good title assumes you purchased the car in good faith with no prior knowledge of its finance. 

You still may run into issues, though, as the loan company who lent to the previous owner will want its money back. It may contact you about the car, trying to get to the bottom of the case. However, it’s up to the car finance company to prove that you don’t have a good title – not the other way around. 

What do I do if the car finance company contacts me? 

Even though you don’t need to prove you had a good title when buying the car, it’s still a good idea to communicate with the finance company. Provide them with details of where and when you purchased the car, as well as any other relevant information in regards to the sale. 

Keep copies of correspondence, just in case you need them at a later date. It may also be worth contacting the person you bought the car from, explaining the situation and reminding them about the outstanding finance. 

How to handle a difficult car finance company. 

There’s no guarantee that the car finance company will take your word for it about how you bought the car. They may even push harder, demanding any outstanding finance or even trying to recover the vehicle. 

It’s best to remain calm in such a scenario, be professional, and keep engaging with them. If you’re confident that you bought the car with a good title, it may be worth writing a letter of complaint to the finance company while also alerting Citizens Advice and the Financial Ombudsman. 

How can I avoid buying a car with outstanding finance?

Performing a history check is the best way to find out if a car has any outstanding finance. We strongly recommend doing this, as it’s the only way to tell if the vehicle has a clean history, finance or otherwise. 

Simply pop the registration and millage into the app, and we’ll return all the information you need regarding the vehicle. It only takes a few seconds and will give you peace of mind when you go to buy your next car. 

I bought a car with outstanding finance – now what?

If you’re aware of a car having outstanding finance before you buy it, you should walk away – no ifs, no buts. It can be tempting to ignore certain aspects if you really love the vehicle, but buying a car with outstanding finance will only lead to headaches further down the line. 

You’re essentially just as responsible as the seller if you buy it without a good title, and a car finance company can come after you for the money and the car. Even if the seller says they will pay off the finance, it’s best to wait until they’ve done so before buying it from them. A car is a significant purchase, and you don’t want to make the wrong decision when you buy one. 

Smart car purchases

Whether you’re buying a car from a private seller, online or dealership, it’s always worth performing a history check and ensuring that everything is right with the vehicle. That way, you can be confident about your purchase and enjoy all the positive aspects of owning a car without any of the hassles. 

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