While getting rid of company car benefit in kind tax is hugely appealing to the bank account, car buyers need to be aware of several pitfalls.
And one of those is finance fraud.
It’s becoming a big problem when changing your car or buying another new used car.
According to new figures from automotive data experts FreeCarCheck, the number of cars sold with outstanding finance has risen to one in three from one in four last year.
HPI says that, based on the number of finance flags raised in 2017, over 6 million used cars were identified or ‘flagged’ as still having finance owing on them. In the first four months of 2018, 2,437,025 finance hits had been flagged by end of April.
Fraudulent activity only takes place if the car seller tries to sell the vehicle with existing finance still owed, without letting the buyer know.
With the rising popularity of PCP agreements over the past few years, HPI reckons that statistically there’s more chance than ever of buying a vehicle that hasn’t yet been paid for – one in every three HPI checks now highlights that there’s outstanding finance.
Fernando Garcia, head of consumer at HPI said:
“Buying a car with outstanding finance can land the unwitting buyer in trouble as most finance agreements or loans will grant the lender ownership of the vehicle until the debt has been paid. The debt stays with the vehicle not the borrower.
“Even if a buyer bought the vehicle in good faith, if the finance hasn’t been settled then the lender could repossess the vehicle, meaning you could lose the car and the money you paid.”
Car styles by finance fraud
In 2017, the percentage of 4 x 4s hpi flagged as having outstanding finance was 41.8%, campers (48.5%), coupes (43.3%), executive cars (40.5%), luxury cars (31%), performance cars/hot hatches (48.6%), supercars (40.9%), MPVs (33%), taxis (27.2%), tractors (30%) and vans (29.5%).
Fernando Garcia added: “The first thing any used car buyer must do is ascertain whether the potential purchase is actually paid for. It’s impossible to tell if a vehicle has outstanding finance just by looking at it, which makes a vehicle history check an even more vital form of protection for buyers. An HPI Check can help protect consumers from buying a vehicle with something to hide, saving them cash as well as keeping them safe.
Before you buy your next car
- Get an up-to-date car check to see if finance is outstanding. Companies such as HPI Check have a £30,000 data guarantee protection from buying a vehicle with outstanding debt. They will also do a search on mileage and check the VIN number
- Have you thought about insurance costs? Make sure you include business use insurance if you intend to use your car for work
- While changing a car is exciting, a used car won’t have the same level of warranty protection as a new one. How will you budget for unforeseen repairs? Do you need warranty protection?
- Do a simple MOT test check via the Gov.uk website