How to check a used vehicle for outstanding finance

Why it matters

Plenty of vehicles are bought on HP or PCP. Until the agreement is paid off, the finance company usually owns the vehicle, so the seller may have no right to sell it.

Buy one with finance still on it and the lender can try to take it back. Private buyers have some protection under the Hire Purchase Act 1964, but claiming it can be slow and stressful. It's much easier to check first.

What to ask the seller

Ask straight out whether there's any finance on it, including PCP, HP or a logbook loan. If they say it's being paid off, get a settlement letter from the lender before you pay anything.

• Any finance or loan secured on it?
• Settlement letter from the lender?
• Name and address on the V5C match the seller?
• How long have they owned it, and why are they selling?

How a full report helps

A full report searches for finance agreements registered against the vehicle. If one shows up, stop and call the lender. A clear result means no record was found. It isn't a guarantee there's no finance.

Run it as close to buying day as you can, because finance can be added or cleared at any time. Keep a copy with your receipt.

Before you pay

Pay by bank transfer to the person named on the V5C, not in cash. If the finance answer isn't clear, don't go ahead until it's sorted in writing. Walking away costs nothing. Losing the vehicle costs a lot.