Outstanding Vehicle Finance: What You Need To Know

While it’s not unusual for a vehicle to have outstanding finance, we recommend that you only purchase a vehicle once the outstanding finance is cleared.

It's important that you are aware of a vehicle's finance status before making a purchase. In the case where a vehicle has outstanding finance and the person responsible for the debt defaults on their loan after you've bought the vehicle, the finance provider can seek to repossess it from you. Although you can't inherit the loan of the debtor, you would risk being at the total loss of the money paid for the vehicle.

Dealerships will generally not sell vehicles without first settling any outstanding finance owed, but this cannot be guaranteed in all cases. For this reason whether you are buying from a private seller or a dealership, it’s important to check a vehicle's finance status.

If your Finance Report confirms that the vehicle is still subject to a finance agreement, we recommend that the seller settles the finance in full before you agree to purchase the vehicle. In some cases the seller may try to sell the car in order to pay the outstanding finance but it is important to note here that until the debt is settled, the ownership of the vehicle remains with the finance provider and is not transferred to you. Unless you know and trust the seller, it’s a risky process to agree to buy a vehicle with finance outstanding.  

We would also recommend that you ask the seller for written confirmation from the finance provider once the debt is settled. Due to data protection, the finance provider will only provide this information to the seller. Once you confirm the finance has been cleared, you can purchase the vehicle outright or enter into your own finance agreement.

Our final piece of advice when considering buying a car with outstanding finance is that if you’re not happy with the arrangement or feel in any way unsure about your purchase, don’t be afraid to walk away.