17 per cent of cars resold had finance outstanding, survey shows

ALMOST ONE IN FIVE cars offered for sale which were less than four years old had finance outstanding, according to a study by vehicle-checking firm Cartell.ie.

Legally, a buyer can not take full ownership of a car unless the person they are purchasing from has it, and you do not get that until all loans are paid off, a spokeswoman for the Society of the Irish Motor Industry (SIMI) said.

“A person cannot sell a car they do not own,” she added.

Ownership of a car remains with the finance firm until the loan is repaid in full.

This means the unsuspecting buyer of a car that has outstanding finance attached may not own the vehicle and could have it repossessed if the outstanding loan is not repaid.

Cartell examined 5,906 Irish-registered vehicles offered for sale during the first six months of the year and found more than 19 per cent of those registered in 2011 had loans attached.

For 2010, the figure was 17.5 per cent. For 2009 it was 18.7 per cent, while almost 21 per cent of vehicles registered in 2008, and 20 per cent registered in 2007, had outstanding finance attached.

It is not clear whether the vehicles were offered for sale privately or through a garage.

According to the National Consumer Agency (NCA), someone selling a car may also be breaching an agreement with a finance firm.

The NCA says there is a lack of consumer understanding about car finance and, in particular, the fact that the loan follows the asset. This means the finance company may seek to recover the vehicle to pay off the loan.

In many cases, car finance agreements preclude the sale of the vehicle until the loan is repaid.

As most car finance arrangements run for between three and five years, the percentage of cars offered for sale with loans attached is lower in older vehicles.

This can be seen in the fall – from more than 20 per cent in 2007 to 14 per cent in 2006 – in the number of vehicles with outstanding finance.

However, the issue is still evident in older cars: the Cartell study found 10 per cent of 2004 vehicles had outstanding loans registered against them.