Watch Out For Used Car Financing Fraud

HPI, a vehicle data verification organization, is advising buyers of used cars to run history checks on their prospective purchases. The goal is to make sure there is no outstanding car finance before making a  purchase. This advice comes on the heels of a report from BBC 5 Live Investigates that found some vehicle owners are selling their cars before paying off the financing.

These car owners are raising car finance using logbook loans that are secured on their vehicles. When they sell vehicles before paying back car loans, the used car buyer is left to pay off the debt. Placing the car buying population at risk like this could cause people to lose a large amount of money and even result in the car being repossessed.

HPI Consumer Services Manager Nicola Johnson stated that her organization has become “increasingly aware” that this activity is taking place. HPI cautions buyers to check to make sure the vehicle is not on finance before making a purchase. This organization is the only verification company that identifies Bill of Sale agreements for a vehicle.

When a vehicle is sold with financing outstanding, the company who financed the car is entitled to repossess it. Unlike a hire purchase type of agreement, there is no purchaser protection in a Bill of Sale agreement. The government has issued a proposed code regarding practices for Bill of Sale agreements that would help address the situation.

For now, buyer beware and be sure to use vehicle history checks that will reveal outstanding car finance. If a vehicle owner has not paid off a logbook loan used for car finance, running an HPI check will reveal the situation. The prospective buyer can then bypass this vehicle or ensure that the current owner pays off the loan before he or she agrees to purchase the car.