What can I do if I bought a car with outstanding finance?

This comes up more than people expect: sometimes a previous owner sells a car that still has money owing on it without telling the buyer - occasionally on purpose, but often simply because they didn't realise they were supposed to pay it off first.

With hire purchase and most PCP deals, the finance company owns the car until the agreement is paid off. The law that deals with a car being sold before that happens is the Hire Purchase Act 1964. In broad terms, it offers some protection to a private buyer (someone buying for themselves, rather than a motor trader) who genuinely didn't know about the finance when they bought the car. Where that protection applies, the finance company's claim is generally against the person who took out the finance, rather than the buyer.

Whether it applies to a particular purchase depends on the details, such as who sold the car and what the buyer knew at the time. Checking for outstanding finance before buying is the simplest way to avoid the situation altogether. For anyone already in it, Citizens Advice explains the options in more detail.

Not sure whether a car you've already bought still has finance on it? Our Confidence Report includes an outstanding finance check, if it would help to confirm either way. See the Confidence Report →

Source: legislation.gov.uk: Hire-Purchase Act 1964, Part III