Outstanding car finance warning as Brits could have cars seized – here’s how to avoid hidden finance fraud
A QUARTER of used cars on sale have a hidden finance history that could leave buyers out of pocket and without a motor.
Brits struggling to meet monthly repayments are ditching their cars and not paying off the settlement figure when they sell it.
It means that when a new buyer gets the keys they could still lose their car.
They might be listed as "registered keeper" with the DVLA - but they're not "legal owner" in the eyes of the law.
That right is still held by the finance company and they're able to reclaim the motor at any time.
That'd leave the new owner out of pocket and without a car.
Exchange and Mart said the huge rise in hire purchase and personal contract purchase (PCP) deals means one in four cars on the used market still have finance owed against it.
Lynn Clark, brand manager for Exchange and Mart, said: "With disposable income under strain for many households, it’s not surprising that buyers are turning to loans to finance their car purchase.
"Some struggle to continue with the monthly payments they’ve committed to and sell on the car, but rather than paying off the outstanding debt they keep the money to pay for other necessities.
“In more cases than not, this is simply an innocent act, but by default, it is also a fraudulent one.
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"A car that has a finance agreement against it remains, legally, the property of the finance company until the loan is paid off and if payments are not kept up or the outstanding amount is not paid off at the time of the sale, the finance company has the right to take it back, at any time."
In order to avoid being caught out, Brits should also run a vehicle history check on any purchase.
This will flag up any outstanding finance before you hand over your cash.
And if you are caught out, you should speak to the finance company immediately to try and strike a deal and pay off the amount before the car is seized.
Clark added: "The best protection for car buyers is to get a vehicle provenance check, even if the seller says the vehicle is finance free.
Car buyer's info
"Don’t be fooled either, even if the seller offers a receipt as proof of purchase the finance house will still be able to reclaim the vehicle if it’s found to be on outstanding finance.
"If someone unwittingly buys a car on outstanding finance, they should talk to the finance house immediately to negotiate a deal.
"However, the best thing for buyers to do is to stay vigilant and avoid falling into the innocent fraudster trap."