Do I Need to do an HPI Check Before Buying a Car?

There’s a lot to consider when you buy a new car, and great to see that you have decided to check out this important aspect! We don't want to see you getting your fingers burnt and then featuring in the next BBC Consumer programme!  😯 We start by thinking about the type of car, sound system quality, how many cup holders it has, you know, the really important stuff 😉 But there this is one aspect that you really need to pay attention to is checking the car's history. Before making a purchase, you need to do an HPI check.

What is an HPI check for?

An HPI (Hire Purchase Investigation) check lets you know if the car you’re buying is legit – you don't want to buy a stolen vehicle or one with outstanding finance on it.  That’s why it’s an important step before buying a used car.  We’ve put this guide together detailing everything you need to know about HPI checks in the UK and how they affect your car purchase. 
Want to learn a little bit more about HPI checks? Check out this handy video 👇

What is an HPI check?

The term “HPI check” actually references the first company to provide background checks on cars. Going by the name of Hire Purchase Investigation, the British company offers vehicle history checks on every vehicle registered in the UK with the DVLA.  

Originally created to provide reports for people buying used cars, the company was founded back in 1938 in an effort to stop finance fraud. Today, the company works alongside the DVLA, insurers and the police to ensure people buy cars without a dodgy history. 

When do you need an HPI check?

You should perform an HPI check before buying any used vehicle, and most insurers won’t cover you if the car hasn’t passed its check. Several companies offer car checks to ensure it hasn’t been previously stolen, had its number plates changed or owes outstanding finance. 
Some are paid-for services, while others are free, such as the car check on Carmoola. We’ll run a car check before lending finance to make sure everything is as it seems with the car you want to buy. That way, you won’t have any nasty surprises when you get the keys to your car. 

What does an HPI check cover? 

An HPI check is thorough and ensures the vehicle has no fraud-related issues. These include:

• If it owes outstanding finance
• Has previously been written off, e.g. is classified as a Cat D
• Whether it’s been stolen
• If the mileage showing is legit and matches the car’s previous MOT
• If it has a current MOT
• The number of previous owners
• Identification details such as the VIN (Vehicle Identification Number)
• The number of the number plate, as well as colour changes
• If the vehicle has been scrapped or exported

What is included in an HPI Check?

Outstanding finance

Will an HPI check outstanding finance on a car? Yes, it will, and you would definitely want to know this. Around a quarter of vehicles checked with HPI have outstanding finance. If you were to purchase one of these cars, you wouldn't be the vehicle's legal owner – that would be the finance company. Beyond that, you could still be liable for the debt unless you can prove you bought the car without knowing it had financing owed. 

Stolen

Stolen cars are one of the most common forms of theft in the UK, with around 30 vehicles stolen every day. An HPI check will show if the car is registered as stolen, meaning you can steer well clear and avoid buying a vehicle that is technically illegal. It would not legally belong to you if you bought it and could be taken away to be returned to its rightful owner. 

Written-off

Has a car been in a bad accident? Or, even worse, has it been written off by the insurance company entirely? Around 4% of vehicles checked with HPI aren't roadworthy anymore, and if the car you want to buy has been involved in an accident, you'd want to see proof it has been repaired and made roadworthy again before committing to a purchase. It's also good to remember that vehicles repaired after being written off are hard to insure. So, take this into consideration before finalising your decision to buy the car.

Number plate and VIN numbers

An HPI check will determine if the car's registration plate and VIN match those with the details registered at the DVLA. If not, there could be several problems with the vehicle, and you should avoid committing to a purchase. It’s not worth going through the trouble, so it’s best to keep looking for a better car with no issues.

Mileage and MOT

An in-depth HPI check is a good idea, even if this might cost a little more than a basic one, because you will be able to also look at the MOT status and do an HPI mileage check on the car you want to buy. This enables you to see if the mileage has been "clocked", which means someone has tampered with the odometer. Higher mileage means a lower value for the car, so a dishonest seller might resort to tampering with the odometer to profit more from the sale.

HPI for Private Purchases and Why You Need One

Using a dealership offers you some guarantees when buying a car, but it’s trickier when it comes to a private seller. Therefore, you should be extra diligent and ensure you perform an HPI check before purchasing a car from a private seller. 

Without an HPI check, it’s harder to know things like whether the car has been stolen or if it’s a Cat D. Buying a car with previous finance-related issues could leave you responsible for paying the money owed in addition to the price you paid to buy the car. 

Other Benefits of an HPI Check

As well as seeing if the car was stolen or had any outstanding finance, an HPI check can tell you helpful things like when it last received an MOT. An HPI check will also tell you  If the mileage has been “clocked”, which means the number showing on the dashboard is incorrect.

Roughly one in 16 HPI-checked cars have a mileage discrepancy, while one out of every four will have had the number plates changed. Overall, one in every three HPI-checked cars has found issues for the next potential buyer, such as an active finance agreement or loan still owed on the vehicle. 

How can I get an HPI check?

The first thing you need to know about HPI checks is that they’re not free. Companies that offer thorough vehicle history checks spend resources collecting and maintaining information, so it’s easy to understand why they would require a fee to use their services. Of course, there are other ways to check the history of a used car. So, where can I get an HPI check done for free?  The best way to start would be to go to the UK government website to get vehicle information from DVLA.  

Through this step, you can learn a number of things about the used car you plan on buying, such as the following details:

• Emissions
• Engine size
• European status
• Export status
• First registered date
• Fuel type
• Last log book issue date (V5C)
• MOT expiration
• SORN status
• Type approval category
• Vehicle tax information
• Weight
• Year of manufacture

If you want to know the details of the current and previous registered keepers of the used vehicle, you need to write a request to the DVLA. You may also check if the car can run on E10 petrol using the services available on the government website. 

For more in-depth HPI checks, it’s best to go to the official HPI Ltd website, so you’ll know if the car has been written off by insurers, stolen, or has outstanding finance. The fee for this service is worth it. HPI checks help you avoid serious problems and also provide you peace of mind, knowing that the used car you’re about to buy has a clean history.

How much does an HPI check cost?

HPI checks cost around £10 and can be performed online. If you're buying through a dealership, they should also conduct an HPI check and show you the report. Alternatively, here at  Carmoola, we provide a free HPI car finance check when you apply for car financing. You just need to pop in the registration details of the car during the application process. We can tell you if there are any issues with the car, such as outstanding finance. 

What if I buy a car with outstanding finance?

Technically, you cannot buy a car that still has outstanding finance. The person attempting to sell the car is not the owner because the financing company still owns it if payments are still being made.

Ownership only transferred upon full payment

With this said, what the seller is doing is illegal since they don’t have the right to sell something that isn’t under their ownership. The only time the ownership is transferred to the person using the vehicle is when all payments on the car have been made. 

You didn’t know about the outstanding finance

But what if you bought a car with outstanding finance without knowing about it before finalising the purchase? Usually, people in this situation only find out when the financing company contacts them to repay the loan on the car. In this case, the Hire Purchase Act (1964), specifically Section 27, can help. With this law, you can sometimes actually keep the car under a “good title” if you bought it without knowledge of its outstanding finance. 

Will the lender come after you?

However, just be aware that lenders would want to get their money and will most probably not make it easy for you by proving that you knew of the outstanding finance on the car when you bought it. For example, if you bought the car for a price well under market value, it could be assumed you knew something wasn't right so that would negate any argument that you bought it in good faith. 

What to do if your car has outstanding finance?

The best way you can approach this situation would be to cooperate. For example, it’s most likely that the financing company will contact you. Do respond and communicate. Provide them with as much detail as you can regarding the seller, the date of purchase, the price of the car, the ad for the car sale, as well as all the paperwork from the sale as proof of purchase. Also, it would be wise to keep a record of your communication with the lender. If things cannot be resolved between you and the financing company, you may contact the Financial Ombudsman Service to get advice on the best course of action. 

The Need for an HPI Check

So as you can see, doing an HPI check is fundamental to buying a new car, giving you peace of mind and eliminating future issues. You can then buy with confidence and refocus on the other problems with buying a car, like the sound system quality and the number of cup holders – because you can never have enough cup holders, right? 😂

HPI Check Included with Carmoola Car Finance

We’ll run a history check on the car you want to buy when you apply for car finance with Carmoola. Start by downloading the app to get a budget for your next car. In under a minute, you’ll know how much you can spend on the purchase, making it easier for you to choose the car that best fits your budget. With just your phone, you can run unlimited history checks and search nearby dealerships to find your dream car. Once your finance application has been approved, you can buy the car immediately using your Carmoola card!