Over the past number of years, Personal Contract Plans (PCPs) have proved increasingly popular among car buyers, so much so that over 30% of private buyers use some them to purchase their new car. However, for used car buyers, there has been an increase in the number of cars being offered for sale with finance still outstanding. Cartell.ie estimate that around 16.6 percent, or roughly one in six, used cars currently for sale still have money owed on them.
Any car with a finance package such as hire purchase (HP) or personal contract purchase (PCP) still belongs to the finance company until the buyer has reached the end of the finance term and paid off all the money owed. Only cars where the finance is a personal loan can legitimately be sold.
What happens if I buy a car with outstanding finance?
If there is still finance owing on a car, it belongs to the finance company, so the owner has no right to sell it and the car could be repossessed by the lender.
How to tell if there is outstanding finance on a car?
When buying from a private seller you do not have the same consumer rights as you do when buying a car from a dealership it is very much a case of ‘Buyer beware’. However, it is an offence for a seller to withhold or provide misleading information about the car so with this in mind there are important questions you must ask. Before you buy ask the seller if they are the owner of the car and whether there is outstanding finance on the car. Always request the registration documents, these should show whether the car is owned by the seller or a finance company. It is also worth noting that all Society of Irish Motor Industry (SIMI) dealers have access to a car history check service and they cannot sell a car which has outstanding finance on it. You should also do your own history check as this will not only tell you if there is outstanding finance on the car but it will also identify if the car has been stolen or has been written-off by an insurer. There are a number of companies who can check the history of a car for you online including motorcheck.ie and cartell.ie.
Is there restitution?
Unfortunately, as the financial institution is the legal owner there are very few options. You need to seek legal advice as to whether it is possible to pursue the person who sold you the car.
For anyone tempted by what appears to be a bargain used car remember: if something looks too good to be true, it usually is so always get a history check
19th March 2021