Contents
In short
- A car on hire purchase or conditional sale belongs to the finance company until it's paid off.
- If you buy it, the finance company can try to recover it.
- Private buyers have some legal protection, but recovering your money is slow and uncertain.
- Ask directly, check before paying and get a settlement letter if finance is outstanding.
- Pay by bank transfer to the seller's own account, never in cash to a stranger.
Why it matters
Most new cars in the UK are bought on PCP or hire purchase. Until the last payment, the car legally belongs to the lender, even though the driver is the registered keeper on the V5C.
If the keeper sells the car without settling the finance, the lender can come after the car. You could lose both the car and the money you paid.
The warning signs
- A recent car at a low price from a private seller in a hurry.
- The seller avoids the question about finance, or says “it's nearly paid off”.
- No V5C, or a V5C recently issued.
- Payment requested in cash or to a third party's account.
How to protect yourself
- Ask in writing: “Is there any outstanding finance on the car?” Keep the answer.
- Run a finance check before paying: several services check the finance registers with the registration and VIN.
- If there is finance, agree that it's settled first: ask for a settlement letter from the lender, or pay the lender directly with the seller's agreement.
- Pay by bank transfer to an account in the seller's name, and keep a written receipt with the VIN and mileage.
Written by
The Carvizia team
Every day we analyse used car listings: engines, known faults, maintenance and market value. Our guides bring together what to check before you buy, without jargon.
About usFrequently asked questions
Can a finance company take a car I've bought?
It can try. Private buyers who acted in good faith have some protection for cars on hire purchase or conditional sale, but proving it takes time. Checking first is far easier.
Is a PCP car the same as a hire purchase car?
Both are finance agreements where the lender owns the car until it's paid off. Either way, the finance must be settled before the sale.
Does the V5C show if there's finance?
No. The V5C shows the registered keeper only, not whether the car is owned by a finance company.