Buying Car With Outstanding Finance

If you’ve been looking into purchasing your next vehicle, car finance can be a helpful option as it allows you to spread the cost over a longer period of time. 

While that's all well and good, the experience can quickly turn sour if you unknowingly purchase a new set of wheels only to find out there's outstanding finance on the car.

Therefore, it's vital to understand what outstanding finance is, how to identify it and what could happen if you buy a car with outstanding finance.

Understanding Outstanding Finance and Car History Check

Outstanding car finance is a vehicle sold by the seller with finance still owed on it. 

In simpler terms, this means the lender – be it a bank or a finance company – retains ownership of the car until every penny of the debt is settled.

If someone sells you a car and it still has finance on it, you could soon find yourself with more problems than you bargained for. 

That's why it's so important to carry out a comprehensive car history check before sealing any deal (you can run free history checks with Carmoola) .

The check acts as a window into the car's financial past, revealing any unpaid finance that might be attached to the vehicle.

Renowned services, such as the HPI check, have become vital tools for potential buyers.

It offers detailed insights into a car's financial obligations, so that you, as a buyer, are fully informed and safeguarded from unforeseen post-purchase revelations.

Risks and Legalities: Buying a Car with Outstanding Finance

Here's the real shocker for many unsuspecting buyers. If you purchase a car that still has outstanding finance attached to it, and you don't take the necessary steps to settle those outstanding fees, there's a very serious risk of losing that newly acquired vehicle.

In this case, the finance company own the vehicle and therefore have the right to repossess the vehicle, if the terms of the original finance agreement aren't met.

This is true even if you, as the new owner, weren't the individual who initially entered into the finance agreement.

To add salt to the wound, this could result in a significant financial loss for you.

Imagine the scenario, you've spent your hard-earned money for a car, only to find yourself empty-handed, with neither the car or the cash you spent on it.

That's not to say you'll definitely have to pay up. But you will be required to prove that you bought the car with good intentions and were unaware it had outstanding finance left on it. 

Avoiding Problems: Car Finance Solutions

So, how do you buy a shiny, new car or without falling into the pitfalls of outstanding finance? 

Full Car History Check

Before making any commitments, it's absolutely essential to carry out a thorough car history check.

Take a deep dive into the car's past. Knowledge truly is power in this scenario, and performing a full car history check will help you make the right decisions. 

Contact the Finance Company

If a particular car has caught your eye but comes with the baggage of outstanding finance, don't be disheartened just yet.

Reach out directly to the finance company involved if you now who they are.

They'll probably be able to shed light on the exact amount still owed on the vehicle. In certain situations, they might even offer flexible solutions or provide guidance in how to proceed.

Private Sale Precautions

Venturing into private sales can be a bit tricky. Without the safety net of a dealership, you're treading on thin ice.

If you're considering a car from a private seller, make sure that any outstanding finance on the vehicle is settled before you part with your money.

To safeguard your interests further, always insist on obtaining written documentation or proof that all financial obligations tied to the car have been fully cleared.

Key Factors: Types of Car Finance and Outstanding Balance

Understanding the different car finance types can help you better navigate any potential outstanding finance issues. Here's what to look out for... 

Personal Contract Purchase (PCP)

A popular choice among car buyers, PCP agreements are structured in a way that often includes a larger 'balloon' payment at the end of the term.

If you're eyeing a car under a PCP agreement, dig deeper. Find out the remaining amount on the contract and the size of that final balloon payment so you have a clearer picture of the financial commitment involved.

Hire Purchase (HP)

Hire Purchase is straightforward. Once you've made all the payments, the car is unequivocally yours. If you come across a vehicle under HP outstanding finance, avoid.

Unless you're in a situation where you're buying from someone you know and are happy to take on their finance. Just make sure you get the finance transferred to your name to avoid any further complications. 

Personal Loans

Cars purchased using personal loans add a twist to the mix. Unlike PCP or HP, the car isn't tied to a finance company. This doesn't mean you can let your guard down, however.

It's vital to ensure that there's no outstanding amount on the personal loan for a smooth and hassle-free purchase.

All Paid Off

The aim is to avoid outstanding finance at all costs, as you'll save yourself plenty of headaches further down the line. 

If you're looking for a new car or part-exchange finance to get your dream motor, check our car finance calculator to see how much you can borrow. 

Even better, you can check if a car has finance owing when you use Carmoola, meaning you can be safe in the knowledge that you're buying a vehicle free from outstanding finance. 

Learn More About Car Finance

  1. How Do I Know If I Can Get Car Finance?
  2. What is Car Finance in Simple Terms?
  3. Can You Get Car Finance Online?

FAQs

How to Check If a Car Has Outstanding Finance?

A comprehensive Car History Check, available through various online platforms, can reveal any outstanding finance on a vehicle.

Is Buying a Car with Outstanding Finance a Good Idea?

It can be risky due to potential legal complications and the chance of losing your investment. Always conduct thorough checks and seek expert advice.

What Are the Risks of Car Finance Agreements?

Risks include high-interest rates, potential penalties for early repayment, and the possibility of the car being reclaimed if payments aren't met.

How to Sell a Vehicle with Outstanding Finance?


Clear the outstanding finance first or inform potential buyers about it and arrange for the finance to be cleared upon sale.

Should You Buy a Car with PCP Finance?


PCP finance can be beneficial due to its flexibility, but it's essential to understand the terms and ensure you can meet the final balloon payment.

Can I buy a car with outstanding finance?

While it's possible, it's fraught with risks. Always ensure you're fully informed and take precautions to protect your investment.