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Should I buy a car with outstanding finance?

Car finance has become increasingly popular in recent years: almost 90% of new cars bought by private buyers are now bought on finance. However, with schemes like personal contract purchase (PCPs), until the buyer has reached the end of the finance term and paid off all the money owed, the car doesn’t belong to them. Instead, it belongs to the finance company, which can cause problems if the ‘owner’ decides they want to sell.
Can I buy a car with outstanding finance?
If there’s still finance owing on a car, it technically belongs to the finance company, so the ‘owner’ has no right to sell it. However, some people will try to sell a car before they’ve finished paying off the finance.

If you’re buying a vehicle from a dealership, outstanding finance agreements are often settled at the point of sale. This is quite common, but you should discuss it with them before you hand over any money and get written confirmation that they’ll pay off the outstanding amount.
How can I find out if there’s still finance owing on a car?
You can check a car’s full history by doing a vehicle check. You’ll just need to make sure the vehicle check report will reveal any outstanding finance as not all vehicle checks will do this.

Auto Trader’s full vehicle check will show you if a car has outstanding finance along with many other checks including if it’s ever been written-off or stolen, number of previous owners, recorded mileage, and lots of other details about the car.

When you ask about a car that’s for sale, you may find some buyers show you a history check they have performed. However, it’s possible to fake a check, so we strongly advise you do your own.
What can I do if I find out finance is still owing on a car I want to buy?
Ask the seller to settle their debt with the finance company and provide you with adequate proof such as a clearance letter. Ultimately, they can only sell the car when it’s theirs to sell.
What happens if I buy a car with outstanding finance?
As long as finance is owing, the car belongs to the finance company; even if you bought it in good faith. If you become the ‘owner’ of that car, you’ll inherit any debt, and the finance company will want that settled. If you have already handed over money for the car, you may well have to resort to court action, and that could cost a significant sum.

That’s why it’s important to get evidence that the finance has been paid off before you buy the vehicle. If you’re unable to get this from the seller, a full vehicle check will give you the details of the finance company so you can contact them to confirm it’s been paid off.
Does Auto Trader check for outstanding finance?
The great news is we run a 5-point basic vehicle check on all vehicles advertised on our website. This checks if a car has been stolen, scrapped, written-off, imported or exported. We won’t advertise a car if a check reveals it’s been stolen, scrapped or recorded as Category A or B write-off.

As well as our 5 basic checks, some sellers have purchased our full vehicle check on the cars they’re advertising - which includes checks for outstanding finance. This means you can see a summary of a car's history without having to buy a full vehicle check report. The only difference is you won’t have a data guarantee of up to £30,000 should any information be incorrect.

Data can always change so we strongly advise you to perform your own vehicle check with data guarantee for added peace of mind.