Car Finance Check

Most new and nearly-new cars are bought on hire purchase (HP), personal contract purchase (PCP) or a conditional sale agreement. Under all three, the lender owns the car until the last payment is made. The driver is only allowed to sell it once the agreement is paid off.

Some sellers sell anyway, by accident or on purpose. If you buy a car with finance still owing, the lender can ask for it back or ask you to pay off what is left. Either way, the money you paid the seller is very hard to recover.

A personal loan is not tied to the car, so it will not show up on a finance check and does not stop the owner selling.

Lenders register finance agreements against the vehicle with Experian. For each agreement on record, the report shows:

• the lender, and their phone number where it is held
• the type of agreement, such as hire purchase or PCP
• when the agreement started and how long it runs
• the agreement number, to quote when you call the lender

An agreement can stay on record for a short time after it has been paid off. If the report shows one, call the lender with the agreement number and ask them to confirm it is settled.

Finance data provided by Experian

1. Do not pay yet. Tell the seller what the check found and ask how they plan to clear it.
2. Call the lender yourself. Use the number in the report, not one the seller gives you, and ask for the amount needed to settle the agreement.
3. Agree how it will be paid off. The seller can settle it before the sale. Some lenders will also take the settlement straight from the buyer, with the rest of the price going to the seller. Agree this with the lender first.
4. Get it in writing. Before you take the car, get confirmation from the lender that the agreement is settled.

If the seller will not let you speak to the lender, walk away.

Do I need a finance check if I am buying from a dealer?

A dealer is responsible for clearing any finance before they sell, so the risk is lower. A check still tells you the car's history before you commit, and it costs far less than a problem.

Am I protected if I bought a car without knowing about the finance?

Private buyers who did not know about the finance can have some protection in law, but you may have to prove you bought in good faith. If you go ahead after a check has shown finance, you cannot say you did not know. Citizens Advice can help if this has already happened to you.

How up to date is the finance data?

The report reads Experian's records at the moment you buy it, so check close to the day you plan to buy.

• Write-off check – Has an insurer written the car off?
• Stolen car check – Has the car been reported stolen?

The report also covers high-risk markers, scrapped status, keeper and plate changes, and the VIN. See a sample report.