What happens if you buy a car from someone but they still have outstanding finance on it?

Question

Will that effect me in anyway?

Answer 1

the car could remain as security on the outstanding loan. if the seller defaults on repayments the finance company may take the car from you. you will need to get a letter from the sellers finance company assuring that the finance has been settled with the funds from the sale of the car to you. you will not be responsible for the payments but as i say you could loose the car. worth doing an HPI check to see if any finance is registered as outstanding on the car. it is more likely that a dealers financier rather than a bank will use the car as security. worth £10 on www.hpicheck.com

this applies in the u.k not u.s

Answer 2

It is illegal to sell motor vehicle with outstanding finance on it. It is down to the seller to ensure that the account is paid in full before he sells the vehicle. The seller will then get a letter from the finance company nstating that the car has been paid for in full, and that there is no further payments to be made. You can demand a copy of this letter if you decide to buy the car.
Whatever you do, do not agree to take over the finance payments, firstly because it is illegal, and secondly because this will not prove your ownership once the car is paid for.

Answer 3

Legally the seller shouldn't sell the car knowing finance is owing on it as it belongs the finance company until final payment is made.

If you bought it knowing finance was owing then the car could be taken from you by the finance company. However if you had no knowledge prior to purchase that finance was owing, then the finance company cannot take the car from you and must pursue the person owing finance for the money owed.

Answer 4

It is illegal for anyone to sell a car with outstanding finance on it
as the car belongs to the Finance Company until the final payment and option to purchase (small print) payment is paid.

The seller may be prosecuted and the car may be repossessed.
If you have bought such a vehicle, you should talk to the Finance Company

Answer 5

You in the UK? In which case it's illegal to sell a vehicle with outstanding finance - the finance company own the thing, that's not the same as being the registered keeper. So it's not the vendor's to sell.

If he doesn't keep the payments up you are at risk of the finance company repossessing their car.

So DON'T.

Answer 6

Yes.
They did not have the right to sell the car.

Until they have paid off the finance, the car belongs to the finance company. By selling it they have effectively sold stolen goods, and you have bought stolen goods. The finance company has the right to reclaim the car at any time, leaving you with no car.

If the seller pays of the remaining finance immediately, then you are safe. But until then you are on dodgy ground.

Answer 7

The finance company will reposess it from you, even though you may have bought it without knowing that finance still existed on the car. Unfortunately the person who sold you the car has turned you over - I knew someone who bought a car from an auction and unbeknown to him it had outstanding finance left on it - within 4 weeks the baliffs turned up and reposessed the car.

He lost all his money as I recall.

Answer 8

As far as I'm aware you are not allowed to sell a car if you still have outstanding finance on it. Check it out mate. You could end up with the bill.

Answer 9

it means that the car belongs to the finance company so they can reposes the car at any tme if payments not kept up hpi check will show if any finance is showing on a vehicle you cant take over someone elses payement either the finance must be settled before selling a a vehicle

Answer 10

Yes, the car legally belongs to the finance company until the loan is paid back. If the other person doesn't pay their instalments the finance can take the car away from you.
You have no legal claim to the car.