Used-car buyers are being urged to conduct history checks of prospective purchases to ensure that the vehicle is not subject to outstanding finance.
The advice from vehicle data check firm HPI follows a report by BBC 5 Live Investigates, which found that some car owners raising finance with logbook loans secured on their vehicles are selling the cars before paying back the borrowed money.
The report said that unwitting used-car buyers are therefore being left with debts owed by the previous owner of their vehicle.
HPI warned that this represents a huge risk to the car-buying public, who could lose large sums of money and the on-finance vehicle to repossession.
Nicola Johnson, consumer services manager for HPI, said: "We are increasingly aware of this type of activity, and would advise buyers to always conduct an HPI Check to discover if a vehicle is still on finance.
"HPI are the only provenance check company that has the facility to register Bill of Sale agreements against a vehicle, and if the buyer who was the focus of the 5 Live investigation had checked her car with HPI before she had bought it, it would have revealed the logbook loan recorded against it.
"If a vehicle is sold on, still with outstanding finance, the finance company has every right to repossess the vehicle. Bill of Sale style agreements have no innocent purchaser protection, unlike hire purchase-style agreements, and HPI welcomes the government's proposed code of practice on Bill of Sale agreements which would help rectify this situation."
Copyright © Press Association 2011