Thousands of UK motorists are at risk of buying a car that they will never legitimately own, as the number of checks showing unpaid finance on second-hand motors has increased significantly, and face losing their new car and the money they paid for it without doing a background check before they buy.
MyCarCheck has seen a dramatic rise in the number of checks that have flagged finance issues in the past year, and expects this to continue into 2014. This is largely due to the rise in the number of people taking out lease agreements – usually a personal contract plan (PCP) – with the motor trader to buy the car, which grew by 54% in the new car market last year, and by 46% in the used car market, according to figures from the Finance & Leasing Association.
The problems arise because under the PCP and hire purchase schemes, until the balance of the loan is paid off in full, the legal owner of the car is the finance company. As the V5C form or logbook lists the individual who took out the finance in the first place as the ‘registered keeper’, they actually have no right to sell the vehicle even if they keep up the monthly payments.
Buying a car is one of the most expensive financial transactions you will make in your life, so it is worth checking what you are buying in advance to make sure you are not going to be an unwitting victim of fraud.
These car checks are offered by a handful of companies in the UK, and while you might be tempted to cut costs by not checking out your preferred new motor in advance, you could be paying the price for years to come if you don’t, and unpaid finance is just one of the nasty surprises you might get. Other checks you can perform include discovering whether a car has previously been written off, which could make it a safety risk, or the odometer has been tampered with to make it appear that the car has done fewer miles.