Buying a used car with outstanding finance is one of the most common and costly mistakes buyers make. If the previous owner hasn't paid off their finance agreement, you could find yourself inheriting their debt – or worse, having the car repossessed.
What is Outstanding Finance on a Car?
When someone buys a car on finance (PCP, HP, or a personal loan secured against the vehicle), the finance company technically owns the car until the final payment is made. This is called "outstanding finance" – money still owed on the vehicle.
The problem? The seller might not tell you about it. And even if you pay them in good faith, the finance company can legally reclaim the car because they're the true owner.
How Common is This Problem?
According to recent data, around one in three used cars has some form of finance attached. While many sellers are honest about this, unscrupulous sellers may try to sell without disclosing the debt, leaving you with:
- A car that gets repossessed
- No legal recourse against the finance company
- The loss of your entire purchase price
How to Check for Outstanding Finance
The only reliable way to check if a car has outstanding finance is to run a vehicle history check. Free checks from the DVLA won't show finance information – you need a paid check that accesses finance databases.
What a Finance Check Reveals
A comprehensive vehicle check will tell you:
- Whether finance is currently registered against the vehicle
- The name of the finance company (in some cases)
- Whether the finance agreement has been settled
Run a vehicle check with Green Flag for just £9.99 to see if the car you're looking at has outstanding finance.
What If the Car Has Finance?
If your check reveals outstanding finance, don't panic. Here's what to do:
- Ask the seller about it – They may have a settlement letter or be willing to settle before the sale
- Request a settlement figure – The seller should get this from the finance company
- Pay the finance company directly – If you still want the car, pay the finance company first, then the remainder to the seller
- Get proof of settlement – Never complete the purchase until you have written confirmation the finance is cleared
Protect Yourself: Always Check Before You Buy
A vehicle history check costs less than £10 but could save you thousands. It takes just seconds to run and gives you peace of mind that the car you're buying is legally free from finance.
Don't become another statistic. Check any car's finance status now before handing over your money.
