Outstanding car finance check
Learn about outstanding finance car loans
Steps to buying a used car safely and legally
Check a vehicle before you buy:
- Hire Purchase
- Logbook loans
- Any contract purchase lending such has PCP
- Any other type of car finance
Our car finance checker highlights any such lending secured against the vehicle.
- What is outstanding finance?
- Types of finance held against a vehicle
- Using a car finance check
- Buying a car privately on finance
- Buying a car from a dealer with outstanding finance
- Stocking loans (Unit stocking) – a dealer finance facility
- Selling on finance
- Voluntary Termination
- Part exchanging or trading a car on finance
Screenshot of a CarVeto outstanding finance check
Definition of a car with outstanding finance
Use CarVeto history check for a car registration check that includes over 50 data points.
When a vehicle has money owed against it via a finance company or other type of lending body, it carries outstanding finance.
It is a secured type of lending. If payments are not maintained, the vehicle can be repossessed.
Common finance types
There is a range in today’s market. Here are the main ones offered in the UK:
- Hire Purchase (HP)
- Personal Contract Purchase (PCP)
- Personal Contract Hire (PCH)
When such legal agreements are in place against a vehicle, it is illegal to buy or sell before the debt is paid off, in full.
More information about each product
It’s worth noting here, Lease Purchase and Personal Contract Hire are two types of finance where the borrower never owns the car. Therefore, leased vehicles are not advertised for sale.
If you find a lease-purchase or personal contract purchased vehicle for sale, considering contacting the lending company or the Police.
Personal Contract Purchase is a little different. PCP allows a lower monthly repayment for a set period (usually three or four years). Once the agreement is complete, the borrower/driver/registered keeper has the option to pay a final ‘balloon payment’ and take full ownership of the vehicle. Or, they have the right to decline a complete purchase and get a new PCP deal.
Hire Purchase ends with full ownership of the vehicle. At the point of Purchase, the borrower typically pays around 10% deposit and lends the remainder over a set period of years (one to five). The repayments are higher than a PCP deal, but the car is owned outright at the end of the contracted agreement.
Checking a vehicle for outstanding finance
Buying or selling a vehicle with an existing finance agreement causes a wide range of problems. Go here to check outstanding finance on a car.
Otherwise, you must deal with the finance company owed money, the previous owner who sold you the car and possibly need to seek legal advice with Citizens Advice Bureau or a solicitor.
It is quick and straightforward to see if the car you want can be purchased safely and legally. CarVeto Platinum check will search and return accurate data for any UK registered vehicle; this includes any outstanding finance checks.
The information we provide is sourced via Experian and includes a £30,000 finance data guarantee.
Enter a car reg number here
Each CarVeto Platinum check includes:
- Lending company
- Type of finance agreement
- Agreement number
- Finance company contact information (most times this is a direct phone number)
When we return a finance alert, your car report will result with Warning status. Customers need to act with caution and take additional steps before paying a holding deposit or buying the car outright.
In all cases, do not buy the car until you have written confirmation, there is no outstanding loan held against it.
Car finance owing on a used car you want to buy
Buying a used car privately can save money, but it also comes with risk compared to buying from a dealer or auction. Check out your Consumer Rights when buying a car.
Typically, once you buy a car privately, you take on its problems and are financially liable if anything goes wrong.
Main things to watch out for include:
- Outstanding finance
- Mileage issues
CarVeto check will flag any of these issues. Your report will also highlight:
- VIC inspections
- All number plate changes including plate numbers and dates of transfer
- MOT history and advisory notes
- askMID Motor Insurance database checks
- Registered near data (especially useful when buying privately)
- Road tax information
- Colour changes
The report runs over 20 checks with data points including DVLA, Experian, DVSA, Police Theft Markers, MIB and MIAFTR
CarVeto best-practice when buying private
Here are the steps to staying safe and within the law
- Tell the registered keeper you know the car has outstanding finance
- Ask the owner how much is outstanding and the type of agreement they have.
- Via your CarVeto report, contact the finance company and confirm the amount owing. In most cases, the company will confirm an approximate amount -outstanding and the type of agreement, i.e. Hire Purchase or Conditional Sale Agreement
- Inform the seller you will buy the car once the finance is paid in full, and you have the settlement letter directly from the finance company
- Confirm the finance is paid and do not rely on the word of the seller.
- Obtain a settlement letter from the lending company. It is the crucial step that will keep you inside the law and well away from legal issues down the road. It can also prevent loss of the vehicle and money paid to buy it.
With evidence of outstanding finance paid off, you are safe to go ahead and buy the car.
Note, the lending company updates the car finance Asset Register every 30-days.
CarVeto relies on the data of Asset Registers (in our case, Experian). So, expect a small delay in finance information updates on any future CarVeto report.
Useful resources on Asset Register
Buying a car from a dealer
Check our Stocking Loan guide for full details.
In short, Stocking Loans are a finance facility used by car dealers to fill up their forecourts.
Lending companies such as Black Horse Motor Finance provide a capped facility that allows a dealer to buy cars on their behalf and sell from the forecourt. Have a look at Asset Funder https://assetfunder.co.uk/Products/Stocking-Loan for more information.
The vehicle belongs to the finance company and not the dealer. The dealer is effectively selling on behalf of the lending house and earning a profit.
With the vehicle sold, the dealer repays the finance to the lending company, who often reinvest into another car to sell.
CarVeto flags Stocking Loan agreements and raises a Warning status.
In the main finance section of your report, look to the ‘Finance type‘ for ‘Stocking Loan‘ or ‘Unit Stocking‘.
See image below:
[Image displaying a CarVeto finance check and dealer Unit Stocking Loan]
Steps to manage a car with a Unit Stocking Loan
Note, Unit Stocking is relatively safe. It is sporadic to encounter any type of legal issue when buying a car with an outstanding Stocking Loan.
But, motorists should buy with caution.
Avoid the unnecessary risk and safeguard your money.
Here is what to do:
- Discuss with the dealers and ask when the finance can be paid back
- Ask for proof in the form of a settlement letter. The letter should be on headed paper or business email and include the name and trading address of the dealership along with their VAT registration number.
- Consider contacting the lending company directly, ensuring the Stocking Loan agreement is legitimate. Ask what their best practice is and follow the steps suggested.
Best practice – obtain a settlement letter from the finance company rather than the dealers.
Selling a car on finance
Privately with Hire Purchase
Before you attempt to put your car up for sale, see our latest guide for how to sell a car (helpful when you need a quick sale with minimal hassle).
- The lender remains the legal owner of your vehicle until the Hire Purchase contract is settled, in full.
- You are not legally allowed to sell until you own 100% of the vehicle.
- You may settle any outstanding debt early to take full ownership.
- Be mindful of your contractual requirements and agreement at the Point of Purchase. There may be a financial penalty for settling early.
Exiting your contract
You can return your car if you have paid less than half of the agreed total cost. However, to enable this, you will need to pay any remaining instalments that bring you up to half the vehicle value.
Anything over half the total loan amount means you cannot return the vehicle.
Note, the total costs include all of the loan interest and fees accumulated over the whole loan period.
Hire Purchase Voluntary Terminations
Check out your contract as a Voluntary Termination offers an exit from the loan deal provided 50%, or more, of the total loan cost repaid.
But, consider your credit rating as there are no guarantees it will remain in good standing.
Early settlements save on the amount of interest paid. It’s a way to save money, but you’re likely to incur some type of exit fee that stacks up as either:
- 0.5% of the amount outstanding (when there are less than a year’s payments remaining)
- 1% of the total outstanding loan amount
If the outstanding balance is less than £8,000, the interest becomes payable instead.
Selling a car privately with a Personal Contract Purchase
Contract rules for Hire Purchase and Personal Contract Purchase are similar. Until you have paid the whole outstanding balance, the vehicle remains the property of the lender.
There are a couple of options for ending a PCP agreement early via the Voluntary Termination clause – use the following link from the Consumer Credit Act of 1974 Section 99 that describes your right to return your car to the provider.
Having paid off at least half of the financial agreement, you can return the vehicle to your provider. Anything less than 50% and you must pay the difference. Again, this is the total accumulated amount – lend amount, interest and fees.
Settle the agreement before the end of the contract and retain your vehicle.
If it is affordable, a full repayment may save money if the figure is less than the total cost via monthly repayments.
Trading a car with outstanding finance
Obtain a settlement figure from the lending company. This amount must be paid off in full before you can legally trade or part exchange your car.
Settlement figures remain static for a set period (one to four weeks). The lending company will provide written confirmation if requested (helpful when selling your car privately).
Find out how much is owed versus the value of your car.
Owing more than the value of the car is known as negative equity. If you choose to sell to a dealer, you must give them the vehicle and pay the finance company the difference.
Note, it may be possible to trade your car with outstanding finance, but, its sale value will be significantly less than selling privately. So, if you can afford to repay the loan amount and sell privately, it will likely be a better financial decision.
The next step now is a CarVeto outstanding finance check before you buy. We provide a useful free report with options to buy a Gold or Platinum check before purchase.
Get a free check using a vehicle registration number
For more reading, see how to get a stolen car check for free.
The team at CarVeto.