How to check if a vehicle has outstanding finance

    With most cars in the UK bought on finance, including a large portion of used cars, it’s worth knowing the implications for buying and selling, as well as how to check a vehicle’s history.

    You can sell a car that has outstanding finance, but to do so legally, you have to let your buyer know – and you have to clear the remaining finance before you transfer ownership. The easiest way to sell a financed car is to sell it to a dealer who’s an expert at clearing finance and ending your contract early with your lender. 

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    With most cars in the UK bought on finance, it’s vital to check that the used car you’re buying doesn’t have hidden history.

    If you’re an individual buying a car from another individual, and there’s outstanding finance, it’s a little harder to ensure you have a smooth and trustworthy sale process. 

    An outstanding finance check will offer you complete peace of mind that your car actually belongs to you, and not a lender or finance house. The easiest way to check is by using TotalCarCheck

    What do outstanding finance checks show?

    An outstanding finance check will tell you if any money is owed on the vehicle. A check will also let you know if there’s a hidden vehicle history – which a whopping 1 in 3 cars in the UK has.

    If you are considering buying a used car, then it’s always worth carrying out an outstanding finance check. The best time to do so is before confirming the sale. If you use TotalCarCheck, it will also show you the name of the company the finance agreement is with.

    It’s a good idea to contact the finance company and check if the previous owner has settled the finance, or whether someone still owes money on it. If there is no outstanding balance, then you can purchase the car with complete peace of mind.

    Why should I do an outstanding finance check?

    A third of all checks on vehicles shows adverse history that the potential buyer did not know about.

    Most people are honest, but sadly not all are, and you could end up with a huge bill to cover the outstanding finance – plus your own sale price – if you don’t perform due diligence before buying. It really isn’t worth the risk.

    Not to mention the risk of worse scams, such as people trying to sell leased cars (which they have absolutely no ownership claim over), selling category write-offs, or selling cars with stolen plates.

    How to perform an outstanding finance check on your car

    The most straightforward way to check if a car has any outstanding finance is by entering the reg in the search box at TotalCarCheck and clicking ‘Click to Check’. This will bring up a lot of details about the vehicle – including a display of the make, model, and colour of the vehicle to confirm its identity. 

    TotalCarCheck provides a lot of valuable information for free, but if you’re looking for an outstanding finance check for your vehicle, you will need to pay for the ‘Gold’ service. 

    This gives you a comprehensive breakdown of all vehicle checks – not just outstanding finance checks, but also write-off checks, logbook loan checks, and salvage history checks. If you’re thinking about buying a used car or van, it’s a good idea to head to TotalCarCheck and make these checks to understand the complete history of the vehicle. 

    When you pay for the Gold Service, you’ll be provided with a Certificate of Vehicle History. Scroll down the Finance Check section of the certificate. If there is outstanding finance on the car, you will be told there. 

    It will also give you a vehicle description (e.g. ‘Nissan Leaf’), information about the agreement type (e.g. personal contract purchase), the date of the agreement, the agreement number, and the finance company’s name and telephone number.  

    What if a vehicle check reveals there’s outstanding finance?

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    Selling a financed car doesn’t have to be hard; the only extra step is to get your settlement letter from your lender.

    If your TotalCarCheck Certificate of Vehicle History shows that there’s still outstanding finance on your car, you need to settle the account before finalising the sale of your financed vehicle, or sell with Motorway, where a dealer will clear the finance for you. 

    If, however, you’ve already purchased a car and then discovered there’s outstanding finance on it, you’ll need to seek legal advice before contacting the finance company and proving that you are an innocent buyer who was unaware of the existing finance. 

    This can be problematic, so wherever possible it is advisable to perform an outstanding finance check before purchasing any used car.

    Can I keep a car with unresolved or outstanding finance?

    If you’ve bought a car, and genuinely had no idea that it had outstanding finance when doing so, you may have – in theory, at least – the right to keep it.

    In law, this is referred to as ‘good title’ – and means you bought the car in good faith without prior knowledge of any issues. However, the finance company will still want its money back – and while it’s their responsibility to pursue you rather than the other way round, you will be required to respond to all their enquiries about the car.

    If they disregard your claim of ‘good title’, unfortunately, you may end up being forced to pay off someone else’s outstanding finance. Though you would be permitted to keep the car afterwards, it effectively means paying for your car twice.

    Contacting the finance company in writing to explain the situation is the sensible thing to do – and it is critical that you keep copies of any correspondence you send or receive, for your own records. 

    It is always advisable to tackle the issue rather than ignoring it. For more assistance with issues like this, you can contact the Citizens Advice Bureau for free legal and consumer advice.

    You might also consult a solicitor who will be able to advise you about legal action to reclaim the car or your money. However, this will be costly and can be a long-winded process, so it is always best to perform due diligence before committing to buy. 

    How to sell a car with outstanding finance

    Over 85% of new cars in the UK are purchased using a finance agreement that allows them to pay towards their equity (and ownership) in monthly instalments. The two main schemes are called Hire Purchase (HP) and Personal Contract Purchase (PCP). Car leasing is not the same as financing, as you never own a leased car. 

    Most finance contracts have options to pay a sum at the end in order to gain full ownership of the car, or to trade it in for a new model, based on a ‘guaranteed future minimum value’ valuation that was set at the beginning of the contract. 

    But, what most people don’t know is that they have an alternative option: to sell their car to a professional buyer who will clear the outstanding finance and end the contract. A sale such as this could be worth a lot more money to the seller than the options outlined in their contract. 

    Ready to sell

    When you sell your financed car on Motorway, a UK-wide network of over 5,000 dealers compete to give you their best price. 

    Once the sale is agreed, the dealer will clear the remaining balance with the finance house, and you’ll get any surplus from the sale paid straight into your bank account. 

    The best part: selling your financed car with Motorway is 100% free – without any hidden fees, commissions, or charges! Ready to sell?

    Want to learn more about the best ways to sell your car? Check out more of our guides here, covering everything you need to know about different finance schemes, and what they mean for you as a car owner.