Outstanding Finance: Some Information From Cartell

Cartell.ie understands that Finance is a critical issue for consumers. This was always the case, even before the current economic downturn, but now, more than ever, customers are concerned that a vehicle they purchase may have finance outstanding on it from a previous owner. We’ve been highlighting this issue for some time based on our own statistical analysis (See here). We are aware, for instance, that in 2008 as many as 26% of vehicles for sale in Ireland had outstanding finance.

Percentage of Irish Vehicles offered for sale on finance by reg year 

The information that follows is meant as a general guide. It is not legal advice but it is meant to be useful and to highlight the importance of getting a vehicle checked for outstanding finance before you buy it.


Finance House Buys the Vehicle

Generally speaking the standard position as regards finance on a vehicle is that a finance house buys the car from the dealer and hires it out to the new owner.

The Consumer therefore does not take ownership of the vehicle until the last payment has been paid.

Not Free to Sell until Finance repaid in Full

Generally speaking (and remember that individual terms and conditions can vary) the owner is not free to sell the vehicle until the last payment has been made.

This means that in circumstances where the owner completes a sale while finance is still outstanding, and where he did not have the permission of the bank to do so, then the transaction is not valid as the owner never had title in the car in the first place.

New Purchaser cannot take title in Vehicle

If the original owner did not have title then he/she cannot pass title in the car

The result is that an innocent purchaser (one who does not know that the car is still on finance when they buy) has no right or entitlement to that car

All rights over the vehicle continue to vest in the bank

Unfortunately the new purchaser can lose the vehicle: the bank may seize the vehicle; or the new purchaser cannot sell the vehicle onwards – because they have no title in the vehicle.

New Purchaser: The Problem Scenario

In circumstances where the bank seizes the vehicle from the new purchaser in these circumstances then, generally speaking, he/she can pursue the person who sold the vehicle to him/her but this is costly and will require the services of a solicitor.

UK registered vehicles

Irish consumers should also be aware that UK registered vehicles which have finance outstanding before purchase can also be seized from the Irish owner by the UK finance house.

For all these reasons Cartell.ie strongly advises customers to do a finance check on a vehicle before purchasing it (September 2010)