Buying & Selling

Buying a car with outstanding finance


If you are considering buying a second-hand car you should always check if there is finance outstanding before you agree to the purchase. If you don’t, and there is outstanding finance on the vehicle, you may lose the money you have paid for it as well as the car. 

As long as there is outstanding finance on a vehicle, that vehicle belongs to the finance company, not you. The person you bought the car from didn’t own the car in the first place, which means you can not become the official owner until the finance is paid off, even though you have paid the seller. Once the finance company becomes aware of the sale, they can, and likely will either send you a bill for the outstanding finance or take the car from you. There have been cases in which the car was removed from the new ‘owners’ driveway without being informed. 

Only if you can prove you were not aware that the car had outstanding finance when you bought it can you claim back your losses. However, this can be a long process and in many cases you would benefit from / need the help of an experienced HPI claims solicitor which will likely charge you a flat fee for their services. 

You can avoid this from happening by running an HPI check before the purchase. This check will show if there is outstanding finance left on the vehicle. If there is, you should not continue with the purchase. Knowingly buying a car with outstanding finance will leave you with no legal rights when the car does get taken from you. 

Claiming back your losses

You can claim back your losses if you were not aware of the outstanding finance. You can do this yourself, however you are generally encouraged to seek expert advice as in some cases the matter will proceed to court.  There are specialist HPI Claims advisors and solicitors that can help you with the claims process. Such solicitors will normally charge a fixed fee and are able to represent you in court should it come to that. 

You will claim back your losses from the finance company, not the person who sold you the car. You cannot take legal action against them as the car was not owned by them. However, the finance company will likely investigate what has happened and hold the seller to account. 

Unfortunately, many have been tricked into buying a car from a seller who did not own the vehicle, leaving buyers in a difficult position. For that reason, you should always run the necessary checks before you complete the purchase. HPI checks are easy and quick, and can be requested online for a small fee. If the check comes back positive, do not buy the vehicle. You will likely lose both your money and your car and you won’t be able to take further legal action when that happens if you knowingly bought a car with outstanding finance.