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How to avoid buying a car with outstanding finance

Buying a used car can at times resemble something akin to motoring roulette. Nearly half of motorists who have ever bought a used car privately believe they were deceived in one form or another by the person who sold it to them. Unsurprisingly, drivers are concerned about faulty vehicles and paying too much for their next car. And then there is the worry about the vehicle’s history, whether is it stolen or still subject to a credit agreement? But do motorists know how to avoid buying a car with outstanding finance on it?

Check out our guide and discover how the RAC Car Data Check can help you make the right decision about your next car purchase.

What is outstanding finance?

Outstanding finance occurs when the previous owner still has finance to pay on the car, but sells it on anyway. In doing so, they are fraudulently selling the car onto the next person, without declaring it in any records or communications.

How to tell if there is outstanding finance on a car

Before you buy a used car, you should carry out a car registration check which will tell you if any money is owed on the vehicle, and also if it has ever been involved in an accident or if it’s stolen.

If you’re buying from a dealer, you can ask if they have carried out these checks or you can do your own. Our RAC Vehicle History Check, checks the history of a vehicle and is thus a reliable way to avoid buying a car with outstanding finance.

What to do if there is outstanding finance on a car

Before buying a car:

  • If you discover outstanding finance and you have not yet purchased the car, you should check with the listed finance company to understand whether the account has been settled or if payments are due. If money is still owed you should ask the owner to settle the account before continuing with the sale.

After buying a car:

  • If you discover that there is outstanding finance owed after buying the car, it will be more difficult to prove you have a legal right to owning the vehicle. You will have to convince the finance company you are an ‘innocent buyer’ which can be difficult. If unsuccessful, they can take back the car.

Getting a car check is quick to do online with the RAC Vehicle History Check – just provide a few details about the car you plan to buy.

The following vehicles are exempt: imports, 4x4’s, convertibles, write-offs, hybrids, vans, vehicles over 10 years old, vehicles with more than 5 seats, prestige vehicles, 4-wheel drives, LPGs, motorhomes and vehicles with more than 120,000 miles on the clock.

RAC Loans is a trading name of RAC Financial Services Limited who are acting as a credit broker. Registered in England and Wales no. 5171817. Registered office: RAC House, Brockhurst Crescent, Walsall, WS5 4AW. RAC Financial Services Limited is authorised and regulated by the Financial Conduct Authority. RAC Loans are provided by Shawbrook Bank Limited, Registered Office: Lutea House, Warley Hill Business Park, The Drive, Great Warley, Brentwood, Essex CM13 3BE. Registered in England, Company Number 388466. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority.

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