If you’re worried about getting a finance warning on your vehicle history report, we understand your concern. What would it mean? Should you go ahead with your purchase? Don’t worry. We’re here to help. First, we’ll break down the different types of results you could get and what they mean:
- Pass - This is your ideal outcome. A pass means that the vehicle you’re looking to buy has a clean finance record and no debt against it. That means you won’t take on any outstanding debt when you purchase this used car. A passing result looks like this.
- Fail - This means there is a finance agreement against the used car. If you continue with the purchase; without any further action, you could become liable for the debt that’s outstanding. Proceed with caution. A failing result looks like this.
- Warning - This result is really rare. Most users get their result instantly, but a warning means you’ll need to have a manual check done. You don’t want to overlook a warning, because it could mean there is finance against the car. A warning result looks like this.
What Happens If You Buy a Car with Outstanding Finance?
Technically, the finance company owns that car - not the vendor. So, even if they sell it to you on paper, they really didn’t have the right to do so. And while it is possible to argue you have a ‘good title’, this can be a cumbersome and drawn-out process. Even though the burden of proof is on the finance company to disprove your ‘good title’, most potential owners don’t want the hassle.
What Are the Different Types of Finance?
If the vehicle history report fails on finance, it could have one of three different types of finance against it:
- Hire Purchase - Here, you pay a deposit and then make monthly payments until you pay off the full cost of the loan + interest. The car doesn’t belong to the buyer until they exercise their purchase rights when the final payment is made. A Conditional Sale is ALMOST the same but they automatically own the car at the end of the term.
- Personal Contract Purchase (PCP) - Essentially, this is leasing with the option to buy. You make payments on the car as you drive it. When the contract is up, you can make one big balloon payment to cover the current value or return the car. Buyers don’t own their PCP car unless the balloon payment is made.
- Personal Contract Hire (PCH) - This is a kind of car lease. Buyers never own the car at the end of the contract. They keep making payments to continue using the vehicle for the length of their term. At the end, they return it. With a standard Finance Lease, buyers CAN sell the car off at the end of the term.
- Unit Stocking - Here the bank or car manufacturer owns the car until the balance is cleared once it’s sold. It’s used so that dealers have a good selection of cars available for purchase. They don’t own this car outright.
- Credit Sale - Here you own the car right away, but still make payments. The car can’t be repossessed but you can go into arrears. These types of finance are often offered with interest-free terms.
What To Do if Your Vehicle History Report Shows Outstanding Finance
First, give the finance company a call via the number shown on the report. They can double-check the current status over the phone. If the owner’s just cleared the finance, it might still show on the report until all database records get updated.
If it turns out there is finance outstanding, you could always walk away. You’re not obligated to purchase a used car if you’re not satisfied with the provenance.
If you really love the car, you do have some options:
- Ask the seller to find out the outstanding amount on the car.
- Verify this amount directly with the finance company afterwards.
- Then, you agree on a purchase price minus the outstanding finance in writing. When you own the car, you can pay the finance directly so you’re confident it’s been taken care of.
- Get a written & witnessed agreement from the vendor that they will clear the finance and provide documentation before you complete the sale.
And that’s all there is to it! Not so worrisome when you know what to do. Remember to always get a full car history check before completing any purchase, to avoid any nasty surprises. If you have more questions or need help, just reach out to us here.