Representative Example: You could borrow £10,699 over 60 months with an initial payment of £495.89 (including £199 Admin Fee) followed by 58 monthly payments of £296.89 with a final payment of £495.89 (including optional £199 Option to Purchase Fee). Total amount repayable will be £19,012,40. 26.1% APR, annual interest rate (fixed) 13.3%.
Are you thinking about buying a car with outstanding finance?
Buying a used car on finance is common, but what if the car you're looking at still has finance owing on it? If the previous owner hasn’t cleared their finance, it can create big problems for you as the buyer. This guide explains the risks, how to check for outstanding finance, and what to do if you’ve already bought a car with it.
If a car has outstanding finance, it means the person selling it hasn’t finished paying for it. This often happens with hire purchase or personal contract purchase agreements, where the lender owns the car until the full loan is repaid.
Even if someone has used the car for a while, it still legally belongs to the finance company. So, if they try to sell it without clearing the finance agreement first or without permission, they’re not allowed to do so.
If you buy a car with outstanding finance, you don’t fully own it and the lender could take it back. That’s why it’s so important to check before you buy. A car still under finance is not the seller’s to sell, and buying one can lead to serious problems.
Buying a car that still has finance on it can come with big risks. One of the biggest is repossession. If the seller stops making payments, the finance company could take the car back and you may not get your money back.
You might also face legal problems, especially if the seller hasn’t told you about the finance. In some cases, this could even be fraud. Even if you paid fairly for the car, it still belongs to the finance company until the loan is settled.
That means you could lose both the car and the money you paid for it. This is why doing proper checks before buying is essential. Without checks, you risk losing the car, your money, or both, even if you bought it from someone you know.
The best way to protect yourself is by running a full vehicle history check, like an HPI check. These reports tell you everything you need to know about the car’s background, including:
If you're buying from a private seller, this step is especially important. Many dealers also run checks, but it’s still worth doing your own.
You should never rely on someone's word alone, always check the car yourself before paying anything.
Yes, but only if the finance is cleared first or the lender agrees to the sale. If the car still has finance showing on a check, speak to the seller. A genuine seller should be upfront about the situation and provide a written settlement letter from the finance company.
This letter will confirm how much is left to pay and when it will be cleared. In some cases, the finance can be settled on the day of the sale, but always confirm this directly with the lender before handing over any money.
Always make sure you get written proof that the finance has been fully paid off or will be cleared as part of the sale. Without this, the finance company could still have a legal claim over the car.
It’s also worth taking one extra step to protect yourself, contact the finance company directly and ask if the vehicle is clear of finance. This helps confirm that the paperwork you’ve been given is genuine and gives you peace of mind before handing over any money.
If you’ve already bought a car and later find out it still has finance on it, act fast. Start by contacting the seller or dealer and asking them to resolve the issue. If the seller agrees to pay off the finance, ask for written proof from the lender.
If the seller doesn’t respond or refuses to help, contact the finance company directly. Explain that you’ve bought the car and didn’t know about the finance. The lender may be able to help or give you advice on next steps.
Keep a record of all your emails, letters, and calls. This is important if you later need legal support or want to return the car.
Only if the finance company has agreed. Dealers are not allowed to sell cars that are still under finance unless the lender has approved the sale. If they haven’t, they’re breaking the law and you may be able to return the car.
If a dealer claims they have permission, always check this yourself. Contact the finance provider directly and ask if the sale has been approved.
If you find out later that the dealer didn’t settle the finance, you should be entitled to a refund. Always check with the lender before buying from a dealer.
There are some clear red flags that may suggest a car still has finance on it. These include:
Even if the deal seems too good to miss, don’t rush. Take your time, do your checks, and trust your instincts and walk away if anything seems off, there are always other cars.
