Buyer beware: Check if the car you are purchasing is being sold to you ‘in debt’

Published on 4 January, 2023

Motorists are being warned to check if the car they are thinking of buying has repayments still owed, as latest figures show an increase of vehicles with finance outstanding.

New research shows that there is a one-in-three chance that a car aged three years or younger is for sale with repayments still owed.

Buyers are strongly advised to be cautious as such cars, in reality, belong to the lending institution that is owed the balance of the debt.

Overview

Motorists are being warned to check if the car they are thinking of buying has repayments still owed, as latest figures show an increase of vehicles with finance outstanding.

New research shows that there is a one-in-three chance that a car aged three years or younger is for sale with repayments still owed.

Buyers are strongly advised to be cautious as such cars, in reality, belong to the lending institution that is owed the balance of the debt.

The lender can take possession of the car at any time, leaving you at the loss of not just the car but all the money you have spent in purchasing it.

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The car is not yours until the final payment has been paid to the financial institution.

Vehicle data expert Cartell.ie revealed the latest extent of the potential problem in a report published today.

It sampled 5,906 vehicles offered for sale that were checked via the Cartell.ie website.

The figures show that a one-year-old vehicle now has a 32pc possibility of being on finance. That is not up much (1pc) for the equivalent figure 12 months ago and still lower than the 34pc recorded two years ago but it remains a significant level of risk nonetheless.

In 2021 the comparable figures showed a fall in finance levels over those recorded in 2020. The pandemic was seen as the major reason for that.

The market has subsequently begun to correct itself with finance levels for a two-year-old car now rising to 35pc – up from 33pc last year.

And if you are chasing a three-year-old vehicle (2019), the percentage level of vehicles offered for sale with finance outstanding is 32pc.

The report says: “This means there is still more than a one-in-three chance of a three-year-old vehicle being offered for sale with finance outstanding and the overall level has risen slightly from the same period last year.”

When four-year-old vehicles were checked there was a 21pc chance of repayments still being owed.

The report finds that there are relatively high levels of finance on a six-year-old vehicle, for example. It shows 16pc had finance outstanding, up from 15pc.

While there has been no dramatic increase, the figures show that there is a significant amount of debt on many cars offered for sale. One reason may be that buyers are testing the waters to see what the car is worth before considering what their next move will be. But there are bound to be people who can’t afford repayments and are trying to sell a car “in debt”.

CarsIreland.ie CEO Ross Conlon, who is group director of new business at Mediahuis Ireland, said: “We are witnessing a market correction. The overall percentages of vehicles offered for sale with finance outstanding in key registration years has risen again since the declines recorded in 2020.

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

He urged potential buyers to be “cautious” as “you cannot take good title in the asset until the final payment has been paid.” He warned: “This means you may be buying a huge problem.”

Reasons for the increase in car-finance levels are also likely to stem from increased market activity that have opened after the pandemic and the lack of availability of new cars owing to microchip shortages.

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