Quarter of 2-year-old cars for sale have finance outstanding

MORE than a quarter of two-year-old cars for sale have finance outstanding without the buyer’s knowledge, a new survey reveals.

According to Cartell, Ireland’s online car history checking firm, the scale of the problem could have serious financial implications for used car buyers.

Statistics published yesterday by cartell.ie indicate that buyers have a one in four chance of purchasing a two-year-old vehicle with finance outstanding. From a sample of more than 5,900 vehicles offered for sale and checked on the Cartell.ie site, the figures show that for 2008 and 2007 registrations, the percentage of vehicles on finance is 26% and 23% respectively.

“We urge buyers to be extra vigilant when it comes to checking the financial situation of a secondhand car,” said Jeff Aherne of Cartell. “Car finance differs from personal finance in that the finance company holds an interest in the vehicle until all monies have been paid. Unsurprisingly, finance companies can and do repossess vehicles. Only in certain circumstances can a buyer of one of these vehicles get to keep it without paying the balance.”

The company urged buyers to check before purchasing and also urged sellers to contact their lender if they are in financial difficulties.

“Do not sell your vehicle to someone who could have the vehicle repossessed on them by your lender, as no decent person wants to cause financial hardship to another,” said Mr Aherne.

The study shows that even five-year-old cars may still not be clear of finance. According to the survey, 16.5% of 2005 vehicles offered for sale are still on finance. Even for 2002 vehicles the finance rate is still 7.1%.

“It’s not until you purchase a 2001 vehicle that the likelihood of it being on finance drops to 2%,” said Mr Aherne. “One of the reasons for this is that the value of the 2001 car is such that financing it as a used vehicle would not make sense.”

However, newer secondhand car figures for 2009 buck the upward trend for vehicles on finance. Only 15.56% of the 2009 vehicles checked were on finance.

“It also proves finance was not given out at the same rate as previous years and that the car industry will find it difficult to recover while funds are unavailable,” said a Cartell spokesperson.

* For more information go to www.cartell.ie.