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Buying a used car? Make sure all loans on it have been paid off first

Independent.ie logo Independent.ie 14/09/2022 Eddie Cunningham

Anyone thinking of buying a secondhand car should make doubly sure to get it checked to see if there is finance still owed on it.

That is the warning from experts as a new study finds there has been a 32pc increase in the practice of cars being offered for sale with finance outstanding this year.

In simple terms, there is a one-in-three chance of a two-year-old car being offered for sale with finance repayments outstanding.

That’s heavy odds on you being badly caught out.

Vehicle data site Cartell.ie reports that there has been a significant increase in overall levels of finance. 

If you buy a car with repayments owed you run the risk of it being seized by the financial institution involved and be at all loss of what your paid for the car.

From a sample of more 5,906 vehicles checked via its website in the first six months of 2022, the figures show a one-year-old vehicle now has a 32pc chance of being on finance.

That is an increase of 4pc on the equivalent figure for 12 months ago. There was a decline in the comparable ­figures last year, over 2020, which was attributed to a ­slow-down caused by the pandemic.

The new report says: “The market is clearly firmly out of this environment and finance levels have risen significantly since July of 2021.”

In the case of two-year-old vehicles (2020), the number of cars for sale with finance outstanding was 36pc.

This means there is more than a one-in-three chance of a two-year-old car falling into the “finance outstanding” risk area.

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If you are looking at a four-year-old vehicle there is a 20pc chance of being caught out.

Older vehicles are also showing relatively high levels of finance.

A six-year-old vehicle, for example, has a 17pc chance of having money owed, up slightly on 2021.

CarsIreland.ie CEO Ross Conlon, who is also group director new business at Mediahuis Ireland, says: “The overall ­percentages of vehicles offered for sale with finance outstanding in key registration years has risen since the declines we witnessed last year.

“Buyers should be aware there is now a one-in-three chance that a vehicle that’s three years old or less is for sale with outstanding finance.”

Buyers are “strongly advised” to be ultra cautious in the market as the car technically is not for the current owner to sell. That belongs to the financial institution to which the money is owed.

Cartell.ie emphasises that you cannot take proper ownership of the car until the final payment has been paid to the financial institution.

This means you may be buying what it described as a huge problem.

The reasons for the increase between 2021 and 2022 are likely to include increased market activity, due to the reopening of markets in the wake of the pandemic shutdown.

Meanwhile, the lack of availability of new cars owing to microchip shortages may have increased car finance in the residual market.

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