Checking Finance on a Car Before You Buy It


Purchasing a Car with Outstanding Finance Charges

It shouldn’t be a huge surprise that around 86.5% of new cars purchased privately are done so with some type of financing, whether its bank loans or hire purchases.

What may be a surprise is the fact that a financed car cannot be legally sold until the debt is paid in full. Even the smallest amount, such as £50, prevent a legal, binding private sale. This is illegal, whether you are or are not aware of the debt owed.






If you decide to purchase through the dealership, the situation changes, thanks to dealer/ lender arrangements and Stockings Loans.

Does a Car Have Finance Outstanding?


If you are considering buying a car on outstanding finance privately, it is absolutely essential that you check car finance online to learn if the car has money owed on it and if so:

  • ·        The name of the finance company
  • ·        Type of financing
  • ·        Finance agreement number
  • ·        Finance company contact information


If the current owner offers you their own car history check, it’s okay to look at it, but you’ll still want to run your own. You never know when a seller may try to show you an outdated report.

Purchasing a Car with Finance Outstanding


If you absolutely have to check car finance outstanding, you do have options for making it your own.

·        First, you need to determine the exact amount owed. This is referred to as the settlement figure.
·        Second, contact the finance company and make them aware of your plans to purchase the car. Ask them how much it would cost to settle the car, allowing you to legally purchase it. Also, ask about any terms, policies, procedures, and conditions you will need to follow.

·        Be aware that most finance companies do require that the full amount owed be paid by the person named in the finance agreement.  Occasionally, you may find a company that will allow you to pay the finance outstanding and the rest of the purchase price to the seller. This is entirely up to the lender.

Use the following link for information about stocking loan definitions and the steps needed when buying a car from a dealership with money owning form a lending company. 


So, what happens if the selling price is less than what is owed on the car?

Negative Equity Car Finance


This is the term used to explain the situation when the car’s market value (or selling price) is lower than the amount owed on it.

For example, if a car has a selling price of £8000, but outstanding finance of £10000, the lender must be paid the full £1000. In this case, the buyer would directly pay the lender £8000 and the seller would directly pay the additional £2000 to the lender.


Watch this explainer video on handling outstanding finance correctly:



 Finance Settlement Letter


Regardless of who pays off the finance (you or the seller), the finance company will need to provide you with a settlement letter. This letter should include the vehicle’s details and the fact that the car has no further interest owed on it. You should put this letter in a safe place just in case you were to need it in the future.

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