What to do if a Dealer Sells you a Car with Outstanding Finance

Finance deals on cars are extremely popular in the UK. It is estimated that as many as 90% of private car buyers use some form of finance. Being so popular, it means that there are many cars on the roads today with outstanding finance. This is perfectly normal. It just means that the person driving the vehicle hasn’t paid off the entirety of the loan yet. However, it’s important to remember that they technically don’t own the car until they have.

The most common methods of financing a car do not allow you to sell that car until you have settled the outstanding balance. Unfortunately, this doesn’t stop some people from trying to sell a car on finance. However, they don’t technically own it because they haven’t paid off the finance in full. This is illegal, but not everyone out there is as honest as you and I. Because of people like this, there are many people who have unwittingly purchased a used car that has an outstanding loan on it. Some of these people have purchased the car from private individuals. And others have purchased them from who they thought were reputable dealers.


What happens if you buy a car that has outstanding finance?

So, you’ve purchased a car and genuinely had no idea that it had outstanding finance on it? You do actually have the right to keep it. This is called ‘good title’ and means that you bought the car in good faith and didn’t know that someone still owed money on it and it wasn’t technically theirs to sell.

The problem is in this scenario, is that the finance company still wants their money back for the car as they will be out of pocket. You will therefore receive a letter from them, probably demanding that you pay the outstanding balance in full. In these circumstances you don’t actually have to prove that you have good title. It is the responsibility of the finance company to prove that you don’t have good title.

If the finance company reach out to you then it’s a good idea to respond to them, as it shows that you are honest and willing to co-operate with them. The best thing to do if a finance company contacts you about outstanding finance on a car that you have recently bought, is to explain the situation to them. Be sure to keep copies of any correspondence that you send to and receive from them.


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14 thoughts on “What to do if a Dealer Sells you a Car with Outstanding Finance

  1. I bought my car from a dealer 2days ago, did a balance transfer in full asking amount.
    But when I check the HPI report, it says
    that the car has outstanding bal.
    I have already sent the log book to DVLA
    to transfer in my name,
    Is there any way to get my full refund?


  2. I bought a car from a dealership in London. It was a Spanish left-hand car drive for it to take away to Spain with me I am Living in England for holiday in Spain. When I got to Spain found out there two finds on it. €300 then a find of €1800 I am I am unable to registered in my name until I pay these fines but the company I bought it off will not answer my calls and will not help in any way to sign a paper to say I can pay these phones off can you let me know what my options are thank you

  3. Hello, bought a car after accident in april 2020. I have fixed it and drove it about a year then decided to sell it, ive sold it and after couple weeks received letter that car is on finance and they want car back.Any ideas what to do?thanks

  4. i sold my car to a dealership with outstanding finance and they said they would settle this,2 months later it has still not been settled and my deposit still not returned to me, i have been told that i am still liable fir the outstanding balance but also it is illegal for a dealership to sell a car still on finance as it is still technically owned by the finance company,any ideas what i need to do next?


    I sold a car with outstanding finance and and agreement was signed to say they will pay the remaining finance off and I will get the remaining money. I have received the remaining money and now they have come back saying I need to return the money I no longer have as the car was inspected incorrectly when the agreement was signed. They are trying to say the car has apparently been in a accident when it hasn’t and isn’t in a CAT it’s just had a full respray and all other defects where made aware to the qualified inspector to which the value of the car already dropped by a grand. The car had been registered on the gov website as sold to the motor trade and I no longer own the vehicle. What can I do as they are now refusing to pay the outstanding finance, and I don’t have the money to return nor do I legally own the car anymore is there a way around it as they are saying door dents means they need to re evaluate the car… but how do I know they dents and damage brought to light in the report hasn’t occurred after the sale during transportation to the final inspection.

  6. I had my car seized by GMP. When I went get it out 5hrs later I was refused as it was flagged as finance owing from 2016. Nobody has told me what I should regarding bthis,. I was never told I bought it from so called reputable garage in October 2019 cash for £1,295.00 I still got no car 15days later as I now have wait on Wolverine who say no finance owed, but I saw the actual financial print out . Should I go back to garage I really feel unsettled by it all.

    1. can I ask what happened on this? Same situation happened to me… finance company have seized the car after I was stopped by police as they had reported it stolen. I paid 30% on card and the rest in cash. They’re trying to tell me I only have proof of the 30% so I didn’t pay market value and therefor am not an innocent purchaser! did you have any resolution to your situation?

  7. I have purchased an ex demo car from dealer 3 weeks ago. Told me they have to keep tax on it til end of month, I had no new keeper supplement, needed for new tax. Asked nearer end of month then told they have to keep car in their name til 6th September.
    I found out the car is still under demonstrator finance.
    I’ve now demanded they collect vehicle and fully refund me after the dealer denying finance is still on vehicle and being made to feel like I’m a nuisance of a customer.
    I’m not buying a car for £35k cash not to be the owner.
    They took advantage of me being a cash buyer because if I wanted finance on this car it couldn’t be sold.
    Very angry and put off.
    No integrity whatsoever.
    Beware cash buyers, even if its ex demo from main dealer, make sure you complete hpi check.

  8. Hello
    I bought car 26/12/2019
    Today I had plan to sell my car to the car dealer and get brand new car from them. But they said your car it’s on finance with other company which is I didn’t know because was cheep car and about cash £1725.
    I bought on Facebook and I don’t have there address. Just hand writing which is they name and sing and date on it. No number no address. But 15 months this car on my name with lock book and I’ve got V5C GREEN which show what date new keeper get the car. Now that financial company said we will send you letter just provide what you got from previous seller we can discuss about that. They said you not going to pay finance they money but you need return the car.
    With this much evidence I’ve got from previous seller or owner they will get car?
    My question is they will get car from me?

      1. I have the same situation I have bought the car ,I just relaised it’s on finance and previous owner never told me ! I don’t know what to do ?please someone tel me if finance wil take it back from me ?

  9. Car dealer sold my vehicle to a third party who also took out finance onthe vehicle and hasn’t paid my settlement figure. Where dies thus leave me?

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