Short answer: you can, but you should not unless the finance is settled as part of the sale. If a car is on finance, the lender may still own it. Buying it without clearing the debt could leave you without the car, and without your money.
Who owns a car on finance?
It depends on the agreement. With hire purchase (HP) and many PCP deals, the finance company owns the car until the final payment is made. The person driving it is the registered keeper, but not necessarily the legal owner. The V5C shows the keeper and does not prove who owns the car.
If the seller sells the car without paying the finance off, the lender may still claim it. You could be told to hand it back, even though you paid the seller in full. Getting your money back from the seller can then be difficult.
Does the law protect buyers?
In some cases, yes. Under section 27 of the Hire Purchase Act 1964, a private buyer who buys a car in good faith, without knowing it is on hire purchase or conditional sale, can get good title to it. But:
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It does not protect trade buyers, such as dealers
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It relies on you acting in good faith and not knowing about the finance
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It does not cover every kind of agreement, such as leasing
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A dispute with a lender is stressful, slow and uncertain
So treat it as a safety net, not a plan. If you find out about finance before you buy, you cannot rely on it. This is general information and not legal advice, so get proper advice if you are in a dispute.
1.
Check before you pay. A vehicle history check searches for finance records. You cannot tell from the car or the V5C.
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Ask the seller directly, then verify. Do not rely on the answer.
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If there is finance, settle it as part of the sale. Ask the seller to get a settlement figure from the lender. Pay the lender directly, or use a method that makes sure the finance is cleared, and get written confirmation that the agreement is settled.
4.
Never pay cash in a car park. Use traceable payments and a receipt.
5.
Keep records, including the advert, messages and receipt.
Our guide on how to check for outstanding finance covers the checks step by step.
What if you already bought a car with finance?
Contact the lender and the seller as soon as possible. Keep every record, and consider getting advice from Citizens Advice or a solicitor. Do not sell the car on.
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The seller is vague about whether it is paid off
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A price far below similar cars
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The seller wants cash and a quick sale
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The seller is not the registered keeper
Frequently asked questions
Can the lender take the car after I buy it?
In some situations, yes. The law can protect good-faith private buyers, but you should not rely on that.
Is a PCP car the same as a hire purchase car?
Both usually mean the finance company owns the car until the agreement is fully paid. Always check the specific agreement.
Does the V5C show finance?
No. The V5C shows the registered keeper. It does not show whether finance is outstanding.
How do I check if a car has finance?
Run a vehicle history check that searches finance records. A free CarVerified check shows the basics and our finance check searches for outstanding finance.
An outstanding finance check takes seconds and can save you the cost of the car. Start with a free check at carverified.co.uk or see how our finance check works. If you are the seller, read Can I sell a car with outstanding finance?.