High level of cars sold with loans outstanding

Car purchasers are running a significant risk of unwittingly buying a recently new or secondhand vehicle which still has a finance deal from the old owner still running, an expert has warned.

John Byrne of www.Cartell.ie said its research showed that just under a third of all one-year-old vehicles on sale have finance deals outstanding, up from almost 27% a year ago.

Across all ages, the proportion of vehicles offered for sale with outstanding finance had risen to 11.5%, according to its survey of over 5,900 vehicles.

The failure of the old owner to service the loan could lead to the seizure of the vehicle from the new owner.

“This means a buyer in the market for a relatively new car needs to be particularly careful”, said Mr Byrne, who suggests the rising popularity of personal contract purchase deals, a variant of hire purchase deals, may be behind the increase.

“But remember the impact for a potential buyer is the same: The finance house owns the vehicle until the last payment is made.

“You can lose the car if you purchase it with finance outstanding.

“Overall, finance levels are rising again. Cartell warned the market in 2015 that finance levels had bottomed out and would rise. We anticipate levels reaching or even surpassing 13% in 2017.”

Cartell said more vehicles for certain key registration years are being offered for sale with finance outstanding than in 2015.

Its research showed that for one-year-old vehicles, with a 2015 registration, vehicles for sale with finance outstanding had risen to 31.5% from 26.7% a year earlier.

In the case of two-year-old vehicles, with a 2014 plate, 28% of vehicles for sale have finance outstanding.

Even for older vehicles, the proportion was over 8% of all 2010 registered vehicles offered for sale.

And for all years, the proportion of vehicles for sale with finance outstanding had risen to 11.5% from 9.5%.

The Cartell research suggests that the growing problem is relatively recent. Back on 2005, there was a very small number of vehicles offered for sale with finance outstanding.