What you can do if you have outstanding finance on a car you have bought
Have you recently bought a car which has outstanding finance on it? If you have, you need to take action fast. If you don’t and you continue to use it with outstanding finance on it, you could end up losing the car and the entire car payment. This will obviously leave you in a very bad position financially, which is why it is best to act as soon as possible.
If you aren’t 100% sure, you can check if your car has outstanding finance by running what is called a ‘HPI check’ online. If the result comes back that your recent purchase does have outstanding finance on it, you should contact a specialist solicitor as a matter of urgency so that you don’t end up out of pocket and without a car!
What is ‘finance’?
Buying a car on finance means paying monthly for the car so as to spread the cost of the purchase, a bit like you might do with a mobile phone contract. With a car on finance, the finance company will still be the registered owner of the vehicle until the final payment of the purchase agreement is made. This is important to remember when buying a second hand car, because if the owner has not made their final payment then they cannot legally sell it to you.
What does outstanding finance mean?
If a vehicle has outstanding finance on it, it means that the final payment has not been made to the finance company, so they still own the vehicle. This means that if you buy the vehicle you will not legally own it, and can have it taken away from you. Outstanding finance is sometimes referred to as ‘HPI’, which stands for Hire Purchase Inspection.
You might be thinking “I’ve bought a car with outstanding finance hp – what are my rights?” Don’t panic – you do have legal rights even if you’ve purchased a vehicle with outstanding finance. You can make a claim for compensation of the payment you made if your vehicle has been repossessed, or you can claim to keep ownership of the vehicle. To make a claim, you will have to hire a solicitor to help you because representing yourself and issuing court proceedings is very difficult without the correct expertise and experience.
What is a Hire Purchase Agreement?
A Hire Purchase Agreement is the contract which sets out a person’s finance agreement with the car finance company. It usually allows someone to pay little or no deposit to begin driving the vehicle, and then pay a fixed monthly fee until the agreement ends on a pre-set date. At the end of the agreement, the driver will often get the option to exchange their car for a new one under a new agreement or buy their current car outright.
If you buy a vehicle off someone before their agreement is over, you do not own it, even if you have paperwork saying that you do. The finance company will be notified that the car has been prematurely sold on and will either impound the car or demand that you pay the outstanding finance.
As there are more and more problems with people accidently buying a car on finance some solicitors have specialised in helping those who have. In most cases, if you have bought a car with outstanding finance, such solicitors can help you claim back either the money you paid or the car back.