Buying A Car With Outstanding Finance: What Happens?

Nov 15, 2022 By Susan Kelly

Used car purchases will save you money compared to new automobile purchases, but you must exercise caution to avoid fraud. It is prudent to perform additional checks when purchasing a used vehicle. It's essential to verify that the car is not stolen, has no outstanding loans, and has no major mechanical issues before buying it. How to check if an automobile is still under financing and what to do if you buy one with an ongoing loan are discussed below.

Precisely What Makes Finance So Remarkable?

The amount of money someone still owes on their car loan is called "outstanding finance." Payments on a car loan are typically spread out over several months. You will have delinquent debt if you haven't paid your bills in full. Once you've paid off the entire loan or lease on an automobile, you only become the vehicle's legal owner under most agreements.

My Car Loan Company Has Called; Now What?

We recommend keeping in regular contact with the lender and promptly responding to requests for information or more cooperation. Make sure to keep a copy of all correspondence you send and try to explain your position as honestly as you can. Provide the lender with as much documentation as possible on the car's purchase, including the ad's URL, your receipts, the car's certificate of sale, the seller's address and contact information, and so on.

How Do I Check Car Finance?

An online check of the automobile's history can reveal whether or not there are any outstanding loans on the vehicle, allowing you to avoid purchasing a car with debt. It's possible to see if a car has an up-to-date MOT for free, but you'll have to pay for any other details you require. These more thorough inspections can reveal information like whether or not the vehicle:

  • Has active financing and the name of the financing firm.
  • Assumed stolen; police report filing.
  • I was in a severe collision.
  • Has been declared a total loss and then fixed.

What Should Happen If There Is Still Finance On The Car?

If the vehicle you wish to buy still has special financing when you finish your research, you should hold off on making the purchase. It would help if you investigated this further and insisted that the seller settle the financing before proceeding with the sale. After that, the seller (hopefully) pays the settlement amount.

You can verify the loan is paid off by contacting the finance business directly or asking the debtor to provide you with the necessary paperwork. As an alternative, you and the seller might work out a deal where you pay the settlement amount up front, and the difference is subtracted from the price of the car. The settlement amount the seller offered you can be verified with the financing company.

What If I Buy A Car With Debt?

What if you acquire a car without knowing there is still a loan? Don't worry; options are available even if you discover out after the deal is finalized. The financing firm may contact you to collect the outstanding balance on your car loan before you realize you have a debt.

While this may be cause for concern, those in a similar position may find relief in Section 27 of the Hire Purchase Act (1964). You have the right to keep your car under "good title" according to this law if you purchase it without being aware of any special financing.

Tips For Dealing With A Challenging Auto Lender

You can't assume the auto lender will accept your proper explanation of how you acquired the vehicle. They might try to retrieve the car or demand payment for any outstanding debt. Maintain composure, act businesslike, and continue talking to them. Suppose you're sure the automobile you bought had a clean title. In that case, you might want to send a complaint letter to the finance firm and notify Citizens Advice and the Financial Ombudsman simultaneously.

If That Doesn't Work, Then What?

The finance company may refuse to accept your explanation and insist that you continue making payments or surrender the vehicle. Again, the best action is transparency, but the corporation may still try to retrieve the car despite your efforts.


Car financing is a piece of cake if you are equipped with the correct knowledge and resources. For this reason, we at Carmoola are dedicated to ensuring that everyone in need may gain access to information about auto financing.

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