How Do I Do a Car Finance Check on a Car I'm Buying?

Don't you think there is always an air of excitement that comes with buying a new car? 😃 The fresh new vehicle smell and the spotless interiors are certainly a vibe. But before you get carried away, make sure you've performed the necessary checks on the vehicle before you purchase. This is especially true for second-hand cars, which could have outstanding finance. It's rare, but not unheard of, and you don't want to get caught out. With that in mind, we've put this guide together detailing how you can do a car finance check before purchasing your new motor. 

Car finance and cars

Most cars in the UK are bought with finance, either personal contract purchase, hire purchase or a direct loan. You can buy a vehicle and pay less upfront, spreading the cost over a set amount of time, usually between 12 months and five years. Yet, many people sell their cars and settle the finance before the contract term ends. 

What is outstanding finance?

There are, however, a small minority who will sell the car privately without paying off the finance. A car may have outstanding finance on it where the previous owner still owes the lender, but sells the vehicle anyway. This is where you need to be careful, as you have the danger of losing your new car in the future if they don't settle their debt. 

How can I do a car finance check?

Fortunately, you can check if a car is on finance by running a background check before purchasing the vehicle. This will show if there's any outstanding finance or other issues, like if it's stolen or has been in an accident. To perform a car finance check, you can:

Ask the dealer

If you're buying from the dealer, they should carry the checks out on your behalf as part of their sale process. It's still worth confirming with them and asking for the report before buying the car. 

Do it yourself

Whether you're buying from a dealer or a private seller, it's worth carrying out a history check yourself. You can do this by using websites, such as Carmoola, who do a free car finance check. Once you've downloaded the app, enter the car's registration to find out handy information, like if there's any finance owed, when the MOT expires, previous owners and more. 

HPI check

You can also get a detailed breakdown of the car with an HPI check. HPI stands for Hire Purchase Investigation, but most check cover more than just outstanding hire purchase. These usually cost around £10 and offer a fully comprehensive report, looking at every aspect of the vehicle since its production date. 

What do I do if the car has outstanding finance?

Before buying the car

If you haven't purchased the car and find out that it's got outstanding finance, you should check with the listed finance company to see if it has been settled and if the status just hasn't been updated. But if you find that money is still owed, you should ask the owner to pay the finance before you buy, or simply walk away from the purchase. 

After buying the car

Discovering that a car still has finance owed after buying it can be distressing. If this happens, you will need to convince the car finance company that you are an innocent buyer who purchased the car with good intentions. Still, they may have the legal right to repossess the vehicle. That's why it's vital to safeguard yourself and perform a car finance check before committing to anything.

Check if a car has finance

Buying a car and finding out it has finance is far from ideal, but it's also easily avoidable. With a range of options, including free car finance checks, you can do your due diligence before making the purchase. So when you drive away in a new set of wheels, you can feel confident that it's entirely free of finance from the previous owner. 👍🚘