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I’ve bought a car that’s still on finance

If you’ve bought a used car from a private seller or a trader, the seller should always have what is known as ‘legal title’ – essentially, the seller should have the legal right to sell the goods.

If you have discovered that the car has outstanding finance attached to it, it is likely that one of the following scenarios may apply:

  1. The vehicle may have been sold without legal title
  2. The seller of the car, with intention to do so, has not fully paid off any outstanding finance to assume ownership or this process has been delayed with the finance company.

You may be able to consider the following points:

  • If you have acted in good faith and were genuinely unaware of the outstanding finance, you may wish to present an argument to the finance company if approached, that you are an innocent purchaser of the vehicle and feel that you have ‘innocent title’ to the car. You may also wish to contact the seller to find out if they have settled the finance or are in the process of doing so. (If possible, try and getting written confirmation of this.)
  • If a finance company is looking to take the car back, or seeking payment of outstanding finance, you may wish to suggest that any debt be pursued against the individual responsible (the debtor) and not you as an innocent purchaser.
  • You may have rights against the seller of the vehicle, whether a business or private seller, if they did not have the legal right to sell the car to you. (Cars with outstanding finance are usually owned by the finance company so they cannot be legally sold by a business or private seller.)

While it’s up to the finance company to prove that you don't have good title, you may wish to contact them and explain your situation. It may be best to do this at your earliest convenience and to also follow it up in writing. Remember to include details of the seller, the date you bought it and any proof of purchase you might have. If you have the original advert for the car then you could include a copy of this too.

What if they take the car away?

If you believe that you have good title to the car, you should contact the finance company first and complain via their formal complaint’s procedure. If you have exhausted the finance company’s complaints process, your next step would be to contact the Financial Ombudsman Service who may look at your complaint further.

If the car has been taken away by the finance company, then you should contact the seller as soon as possible, ensuring that you make it clear that you didn’t feel they had the right to sell you the car. You may be able to ask for a refund and you may be able to request any additional losses that you might have incurred - if you can support this claim with evidence.

It’s always advisable to complain in writing and to send it by signed for mail as this will allow you to track the postage to confirm that it’s been received. Alternatively, you could send an email requesting a read receipt allowing the seller a reasonable timescale to reply.

Last updated: 29 March 2019

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