Things to know before buying a car with finance owing

If you are considering buying a car with finance owing, this article is for you. Many used car buyers find that their new car still has an active loan attached to it. Without proper checks and reports, buying a used car can become a nightmare. If you want to avoid this nightmare, you can either get a car history check report from a reliable third party like Cars24 or can buy a used car directly from us and skip the hassle. We will check and manage on your behalf.

Before you hand over money, it’s important to understand what “finance owing” means, how to verify it and how to clear any outstanding finance charges. This article explains everything you need to know about buying a car with finance owing. This will include the risk involved, how to check and what to do if you are selling a financed owed car.

What Does Buying a Car With Finance Owing Really Mean?

When you are buying a car with finance owing, that means the vehicle is still under a debt or loan agreement. This also means that the lender is the true owner of the car, not the registered owner, until the debt is fully paid off. So, when you are buying a car with finance owing you are buying a car that is legally owned by the lender, and if the seller defaults on the repayment cycle, the lender can take the car back. 

Even if you have paid for the car, the lender has the full right to take it back if any payment cycle/date is missed by the former registered owner. This is why knowing how to check if a car has finance owing before buying is a necessary step. This small step can save you from major loss later on.

The Risks of Buying a Car with Finance Owing

Buying a car with finance owing is risky, and here are some of the main dangers that come along with buying:

• Repossession: The lender can reclaim the car if the seller doesn’t pay on time or still owes money.
• Ownership issues: You might end up paying for and purchasing a car that legally isn’t yours.
• Financial loss: Your money can’t be recovered if the lender takes away the car.
• Insurance complications: Cars with active loans or debt aren’t insured by many insurance companies. They are also hard to register.

If you want to avoid these risks, before buying, always get a Check Vehicle History Report from Cars24. If you are purchasing a car with a finance owing, you need to take extra care to confirm when the loan will be cleared. If cleared, ask the seller to update the official documents. You can easily check finance owing on the car before making a final decision. You always have the option to skip this hassle and buy a used car with confidence from Cars24.

How to Check Finance Owing On Car​

Knowing how to check if a car has finance owing is one of the most important parts of your due diligence. In Australia, if you just want to check financial encumbrance, you can get it from a PPSR check (Personal Property Securities Register), and if you want a comprehensive background check, then choose Check Vehicle History from Cars24. 

Here’s the process to check the finance owing on car records safely:

1. Get the VIN number (Vehicle Identification Number).
2. Visit the PPSR website or Cars24 Check Vehicle History for a comprehensive car history check, including a PPSR report and VIN check.
3. Pay the fee as per the service.
4. Download the report.

The PPSR report shows:

• Finance owing 
• Written-off
• Lender name  

Cars24 Check Vehicle History Report includes:

• Encumbrance check
• Written off check
• Stolen check
• Odometer comparison
• Registration check
• Vehicle Valuation
• Market Demand
• PPSR Report

If you’re unsure how to check if a car has finance owing, then go ahead with the complete car history check report from Cars24. This report is necessary for anyone purchasing a car with finance owing.

What to Do if You are Buying a Car That Has Finance Owing

If your search report shows that you are buying a car with finance owing, don’t panic and follow these steps:

1. Ask for proof: You can ask for a payout or a clearance letter from the seller’s lender. This letter shows how much is owed or left to be repaid.
2. Pay the lender directly: You can discuss with the seller and directly pay to lender and get the documents transferred.
3. Get confirmation: Ask for a written confirmation from the lender about the clearance of the loan.
4. Check again: Run another PPSR check to confirm the encumbrance has been removed.

When you follow these steps, buying a car that has finance owing becomes much safer and more transparent.

Selling a Car With Finance Owing

If you are a seller, then you must clear your finance before listing your car. Buyers today are more careful and aren’t interested in purchasing a car with finance owing. Buyers want a car with a clear encumbrance. Here’s how to clear encumbrance properly:

• Contact your lender: Ask for the total amount needed to close your loan.
• Pay off the balance: You can settle this using savings or the amount from the sale of the car.
• Notify your lender: Let them know you are selling the car so that they can prepare a release letter.
• Get a clearance statement: A letter of confirmation that all debt is clear.
• Verify with a PPSR check: Double-check that no debt is outstanding on the car or in the records.

Conclusion

Whether you’re buying a car with finance owing or trying to sell one, being transparent and clear is the key. Always run a PPSR check and a car history check before you make the final payment. If you are purchasing a car with finance owing, make a payment directly to the lender and get the car transferred. 
When you understand how to check if a car has finance owing, take the necessary steps. Whether you are selling or buying a car that has finance owing, don’t forget to check, confirm and clear before you commit. Get a Vehicle History Check from Cars24 to know all about your next car.