Thread: Advice PLS my new car has outstanding finance

Hi all would really appreciate some advice. I recently brought a car y reg galaxy. STUPIDLY i know didnt hpi it. 2 weeks after buying it had a accident in it and its been written off. I phoned my insurance company today to see if they had issued the cheque out for the car yet, only to be told that it wouldnt be issued as its come up the car has outstanding finance. It is stll legally owned by the finance company. They wouldnt tell me how much was left because of data protection. Finance was taken out in 2005 and due to end oct this year. So dependng on how much is left, i dnt know how long he hasnt paid it for, my insurers legally have to pay the cheque to the finance company plus take the car. The seller in his own words told me it was hpi clear. But believe my its taught me to always hp cars from now on. Please can someone tell me where i stand. I already told the insurance company when they wrote it off i didnt want to retain the vehicle so not sure i can go back on that now, but if the finance company have to have the cheque for total loss, if i could at least keep the car it would be something and i would get it repaired. Any one know if i can take this any further legally? The finance company have said they will try and recover the outstanding cost from the previous owner and get back to me but i know they wont be able to get anything out of him, thats obviously why he sold the car as he has no money. but surely people cant do this and simply get away with it, for it to fall on the innocent buyer. We saved 18 months for the £3000 weve just paid for the car.

I forgot to mention the guy we brought it from it says on the log book he brought vehicle in 2007 yet the finance was taken out in 2005. Could it be he doesnt know about it either and this is outstanding from a owner before that? OR would the finance people only let him put v5 in his name after hed payed a certain amount ?

As far as I'm aware, when you bought the car you received good title to it and if the finance co want the remaining money, they should get it from the guy who sold it to you.

Why not phone up the financial Ombudsman and see what they think?

The finance co own the car, V5 doc is just the keeper, he sold it without good title so cant be transferred. Your only way forward is do a deal with FC or sue the person that sold it to you.

Hi

I work for a motor finance company – any mods or admin who want to know more about my background please contact me.

In this situation the innocent purchaser is protected by statute and has good title to the car. The relevant legislation can be found here - http://www.opsi.gov.uk/RevisedStatutes/Acts/ukpga/1964/cukpga_19640053_en_1 - in the Hire Purchase Act 1964 c53 s27(2). This Act has since been absorbed by the Consumer Credit Act 2006 c39 s192, but is still valid today.

The relevant part reads as follows:

27 Protection of purchasers of motor vehicles</SPAN></SPAN>
(1)This section applies where a motor vehicle has been bailed or (in Scotland) hired under a hire-purchase agreement, or has been agreed to be sold under a conditional sale agreement, and, before the property in the vehicle has become vested in the debtor, he disposes of the vehicle to another person.
(2)Where the disposition referred to in subsection (1) above is to a private purchaser, and he is a purchaser of the motor vehicle in good faith without notice of the hire-purchase or conditional sale agreement (the “relevant agreement”) that disposition shall have effect as if the creditor’s title to the vehicle has been vested in the debtor immediately before that disposition.

In layman’s terms, it basically states that if an innocent purchaser buys a car that is still subject to a finance agreement, they get good title. There is nothing the finance company can do about it – they cannot ask the new owner to pay nor can they repossess the car. Their only recourse is with their customer. They might want to know more details about the sale, but after that the should take the new owner out of the loop.

I’m not sure about who should receive the insurance payout, but logic dictates that as the OP has good title, it should go to them. Don’t quote me on that, though, as my background is in finance and the associated Acts, and experience tells me that the law isn’t always logical. A quick call to the Insurance Ombudsman should clarify the situation.

The question is in establishing bought in 'good faith' ie where there any grounds to think the deal was suspect, was it too cheap! not good.
The insurance company must pay the finance company first, and usally keeps the car. If you can convince the Insuarance co. you bought it ' in good faith ' then any surplus may given back yo you or you may be able to buy car off them if it is repairable ( depends on classification ).