When it comes to purchasing a new car, there could be an abundance of hidden secrets behind the vehicle. It always pays to do a history check prior to purchase, to see the history of the vehicle. One of the important things to check is whether or not the vehicle is still under finance from the current owner. It is fraudulent to sell a car that is under finance, so it is in your best interest to be aware of any outstanding finance before you purchase.
What is outstanding finance?
Outstanding finance is when the previous owner has not yet finished paying off the vehicle, therefore they are not technically the legal owner of the car. To then sell a car that is still under finance, is classified as fraud, and the seller can be taken to court by the finance company. Although this may sound like a ‘them’ problem, the finance company could actually repossess the car off you, so it is in your best interest to be 100% sure that the car is legally eligible to be sold. All you need is the registration number!
Can I sell a car that is under finance?
In layman's terms, no. There are a series of events that need to happen before selling a car under finance, and you can check them out here. It is common for someone to want to sell a car that is still under finance, so it’s not necessarily done with sinister intentions. Changes in financial situations (both positive and negative), different lifestyle, or a simple change of heart can be a reason as to why someone will want to sell a car prior to it being fully paid-off. Protect yourself from any future headaches by doing a finance check, prior to making a purchase.
Are there any loopholes if I wanted to buy a car I know is still under finance?
It is not impossible to market a car that is still under finance, but it is illegal to sell it on without tying up all the loose ends. Having said that however, if there is full clarity and honest communication between the buyer and the seller, it is possible to come to an agreement by involving the finance company with purchase. By simply letting them know your intentions, you may be able to come to a conclusion that suits all parties. Please note, the transfer of finance remaining is not possible, you will basically be paying off the remainder of the contract, and the seller will walk away with the difference.
Original guide plus finance checks
Finance questions should be settled before deposit or collection. A vague promise to clear finance later is not buyer protection.
Run your own finance check and ask the seller for evidence if any marker appears. The V5C alone is not proof that the vehicle is free from finance.
If finance exists, agree a documented settlement route. Do not send full payment to a seller while the lender interest is unresolved.
Use Car Check Experts for buyer-focused history checks, then compare key legal and road-use details with official services where they apply.
Only with a clear settlement process and evidence before payment.
Yes. The car can look fine while still carrying finance risk.