Help required!......outstanding finance discovered 3 months after purchase....ouch!!

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OK. I have a friend from an EU country (a real friend, it's NOT me! ) who has got himself in a pickle. He bought a Mercedes in August off some guy who had advertised it in gumtree (Unfortunately I was away on holiday at the time or none of this would have happened). The guy had no log book :cool:, but the car was cheap enough that my mate was convinced with a written receipt :cool:. Anyways.....he registered the car in his name and the new logbook came through no probs. On Saturday he went to buy another car and offered the merc as a trade-in.......the deal was arranged but today he went to complete the transaction and the dealership have told him they can't take the merc as it has outstanding finance on it with Black Horse. :eek: They even phoned Black Horse in front of him and he listened in, so there's no doubt. Anyway, no sale......but now he's left with the merc not knowing what he should do. The dealership where he was trying to trade-in gave him the details with which to contact Black Horse (to find out exactly what the problem is) but suggested he should be careful not to give them his address.

Any idea what his options are or as to how he should proceed with this?

forgotmyname

They can easily get his address from the DVLA, It may have nudged them a bit into taking action.

Possible the original owner is still paying them? Or did they default on payment?

Worst case is they report it stolen. Best to find out.

vaio

Assuming it's normal finance and the bloke that sold it to him was the owner/registered keeper then I'm pretty sure the Consumer Credit Laws give your friend good title to the car.

bigjl

Mmmm, your "mate" buys a car at a bargain price, a mercedes so a very nice car and at a bargain price, so his next step is to get a log book then try and trade it in staright away.

Don't listen to all the rubbish that will be spouted about your "mate" having good title due to being an "innocent buyer", as no "innocent buyer" buys a car for under book with no logbook and tries to trade it in the next week.

I would assume you "mate" is from EE, and this isn't the first time this has happened or been tried.

The seller had no legal right to sell the car as it didn't belong to him, so they have illegally disposed of the goods, the police should be involved as your mate has been at minimum defrauded, though the fact that he bought it through Gumtree is just an adaptation of a similar scam pulled in the early to mid ninties, though then it was Loot that was used, due to the fact that the advert is free so no bank or CC details, or if they are given they can be anybodies as no money is taken to pay for the add.

Bloke 1, advertises car in Loot/Gumtree, using a disposable mobile phone, fictional receipt is given, name may or may not match the registered keeper. Bloke 2 registers the car and then tries to trade it in.

The scam works like this, bloke 1 usually has just bought the car and then "sells" it to bloke 2, hopefully before the car is registered on HPI as on finance, the car is registered and then traded on to an unwitting car dealer, as Bloke 2 doesn't like the ashtray.

The other option is the car is reregistered on a private plate which sometime makes it more difficult to unpdate HPI with the new reg, some do it twice,as then the HPI check on the 2nd private plate will say "number change" and it is complicated to trace to the outstanding finance, though this method is out of date as I believe that they can now also search by chassis number.

Finance companies lost a lot of money like this back in the '90s.

The innocent buyer regs where in force then, they are nothing new, the car belongs to the finance company until you come to a deakl with them to remove their interest.

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bigjl wrote: »

Mmmm, your "mate" buys a car at a bargain price, a mercedes so a very nice car and at a bargain price, so his next step is to get a log book then try and trade it in staright away.

Don't listen to all the rubbish that will be spouted about your "mate" having good title due to being an "innocent buyer", as no "innocent buyer" buys a car for under book with no logbook and tries to trade it in the next week.

I would assume you "mate" is from EE, and this isn't the first time this has happened or been tried.

The seller had no legal right to sell the car as it didn't belong to him, so they have illegally disposed of the goods, the police should be involved as your mate has been at minimum defrauded, though the fact that he bought it through Gumtree is just an adaptation of a similar scam pulled in the early to mid ninties, though then it was Loot that was used, due to the fact that the advert is free so no bank or CC details, or if they are given they can be anybodies as no money is taken to pay for the add.

Bloke 1, advertises car in Loot/Gumtree, using a disposable mobile phone, fictional receipt is given, name may or may not match the registered keeper. Bloke 2 registers the car and then tries to trade it in.

The scam works like this, bloke 1 usually has just bought the car and then "sells" it to bloke 2, hopefully before the car is registered on HPI as on finance, the car is registered and then traded on to an unwitting car dealer, as Bloke 2 doesn't like the ashtray.

The other option is the car is reregistered on a private plate which sometime makes it more difficult to unpdate HPI with the new reg, some do it twice,as then the HPI check on the 2nd private plate will say "number change" and it is complicated to trace to the outstanding finance, though this method is out of date as I believe that they can now also search by chassis number.

Finance companies lost a lot of money like this back in the '90s.

The innocent buyer regs where in force then, they are nothing new, the car belongs to the finance company until you come to a deakl with them to remove their interest.

Some good info here, thanks.

For the record, my friend most certainly is innocent in the sense that he had no idea about any finance on the car....he just thought he was getting a bargain. Also, he bought the car over 3 months ago and registered it straight away so he's not had the car for a 'week'. The reason I pointed out he's from another country is because I was hinting that his spoken English is not good and that he wasn't familiar with car documents, etc.....which is part of the reason he's in this pickle. I've known him for years and he most certainly hasn't been involved in any type of car scams or anything. When I spoke to him yesterday he was in a state of panic....his wife was crying in the background! Again, it's just so unfortunate that he bought this while I was away or I would have been able to stop him.

It's a harsh lesson for my friend and I've already explained to him that it's quite likely the car does not legally belong to him. I'm just not sure what he should do next.......call Black Horse?....try to find the guy who sold it to him or the last registered keeper?......go to the police?

dizzydaydreams

In future, if you're looking for cars online, you should only go through a proper car dealing site like https://www.autotrader.co.uk as all sellers must register and car reg is checked etc. This way you can track from their records if it came to the law, but you should always get as much service history and legal docs as possible when buying a second hand car. Fair enough if he doesn't have good English, but he should have taken a friend to help! The best thing now would maybe be to go to Citizen's Advice and see what they suggest in terms of getting cleared and his ££ back.

ROY47

The Consumer Credit Act 1974 gives ‘good title’ to the innocent private purchaser of a car which later turns out to be subject to a claim by a finance company because of a previous, unpaid hire-purchase agreement.

This means that the finance company is not entitled to repossess the car from you. Remember, this does not apply to cars which have been stolen, or cars that were subject to a lease or hire

taken from here

http://www.tradingstandards.gov.uk/cgi-bin/towerhamlets/con1item.cgi?file=*ADV0003-1011.txt

bigjl

ROY47 this has been done to death, the act in question is from 1974, and you can't get good title when the goods are on a lease or hire agreement.

A car on finance is on Hire Prchase, which is a form of hire agreement, if you pay all the monthly hire payments then the goods become yours after paying a final payment that includes a purchase fee of some kind.

The only way round this is when the car has mechanical faults and this muddys the waters as the new keeper has invested time and money into the car and would have to compensated or have the money refunded.

This is similar to a "lein" that a garage might have over a repaired car if the person that signed the HP agreement fails to pay for repairs or the finance.

And yes I have done this, and got proper good title, after negotiating with the HP company and paying them a small sum of money to get goo title, it isn't automatic.

In the op's friends case he needs to inform the Police, though as the seller wrote "on HPi" on the receipt he has no leg to stand on.

The car belongs to the HP company, nobody has title other than them, the only thing a prospective conman needs to do to stop the Police from being involved is pay a few payments then stop, it then becomes a civil rather than a criminal matter.

If you read your link you will see that it clearly says pretty much what you seem to have cut and pasted.

The important bit is the the last sentance "or cars that were subject to a lease or hire agreement".

You do not get good title by saying you are an innocent buyer, though you can negotiate with the owner, the finance co, who may have a figure in mind to release their claim.


As I have said the only grey area is when the car was bought as a non runner and the new keeper has spent a sizable amount of money in betterment of the goods, then the HP company will struggle to get the car back, unless they compensate the person that repaired the vehicle, hence why they are normally very willing to do a deal in such a circumstance, in the OP's mate case his only option is to contact the company and do a deal, or hand it back and try to sue the person that sold him the car.


Feel free to live your life on what is stated on a trading standards website, they aren't really important in this instance, and in fact they seem to contradict themselves in your link.

If you don't make all the payments then the car isn't yours, this includes the final payment with the extra fees to gain you good title.

As you have options to return the car after a set time, it is obviously a hire agreement, it is a hire agreement with the option to purchase at the end of the hire agreement, though if you didn't pay the final payment and fees, then you could actually return the car to the finance company, nobody would be that daft as the car has some retained value.

I am sure more people will come on saying I am wrong and that your mate has good title, none of them will have any direct experience of this, wether as private individuals or when working in the car trade.

I have, and going back almost 20 years.

One interesting little fact i came across over the years is that if the person buying a car on HP has little or no command of the English language then the agreement is almost impossible to enforce, the number of Greek mums in North London that signed for cars for their children only for them to stop paying shortly after had to be seen to be believed back in the '90s.

You can't agree to something if you don't know what it is seemed to be the consensus back then, don't know how it panned out in the end but for a least four or five years some people where driving about in nearly new Vauxhalls from the dealer near Stamford Hill after paying the deposit and two payments.


If things operated as ROY47 says, then why would anybody pay for their car finance, they just need to sell it to their mate and their mate does the same and we all have free cars for life.

bigjl

This is getting boring already, do you really need me to explain what a "lein" on goods are and how when you have a "lein" on goods that it is fairly easy to end up with good title of cars worth several thousands of pounds.

The finance company has to negotiate if they want the car back when a garage carrys out repairs, there is always a delay between you making an offer and them getting back to you, my strategy was to get as much back as possible from whoever I can.

This would include all my storage, labour and parts. Though obviously there are limits to how much you can charge per day for storage.

Two cars that I have managed to get "clean title" of are a Merc 420SE and a 500SE. This was several years ago, mid '90s.

But as the relevant act is from 1974 nothing has changed much since then.

Though feel free to quote actual examples of cars where good title has been achieved just by saying you are an innocent purchaser.

But remember that the act was written before there was such a thing as the detailed HPi checks we have these days, and in 1974 Hire Purchase was a new concept, if it even existed then in the same form as now.

Though a more common concept, which continued on the Motorbike world until about 10/15 years ago were loans for vehicles that weren't actually secured on the vehicle being purchased, which made it easy to sell the goods and keep paying the loan.

The only way to get good title make a negotiated agreement with the holder of the title.

Or do you not agree that Hire Purchase is a hire agreement for the purposes of the Act, if you read a HP agreement my position is that it is indeed a hire agreement.

A finance company will often let a car go for less than they are owed, especially if reclaiming the car would then need to dispose of it, and they don't fix faults they just get rid through a closed auction or sometimes for more tatty stuff an auction that the public might attend.

If the finance company makes a loss it is just business, these things are factored into the business plan, and they will continue to try and get their money back from the person that signed the HP agreement, as a minimum they will get a CIFAS warning put on their credit file.

vaio

bigjl wrote: »

ROY47 this has been done to death, the act in question is from 1974, and you can't get good title when the goods are on a lease or hire agreement.

A car on finance is on Hire Prchase, which is a form of hire agreement, if you pay all the monthly hire payments then the goods become yours after paying a final payment that includes a purchase fee of some kind.......

The '74 act is clear on the circumstances under which an innocent buyer gets good title if the goods are on hire purchase. Following your argument this wouldn't ever be able to happen so I can't see why they bothered with that section of the law (which has also been carried forward, substantially unchanged, into multiple subsequent revision/updates of the legislation)

bigjl wrote: »

.......And yes I have done this, and got proper good title, after negotiating with the HP company and paying them a small sum of money to get goo title, it isn't automatic.....

I'm struggling to see why a finance company that actually had an enforceable claim on the car would hand over title for less than the most they could achieve. Generally they are not known for their altruism

On the other hand, if they knew they didn't have an enforceable claim on the car I can see why they would accept just about any small sum a mug punter was prepared to hand over voluntarily

bigjl wrote: »

........If things operated as ROY47 says, then why would anybody pay for their car finance, they just need to sell it to their mate and their mate does the same and we all have free cars for life.

Because they wouldn't be "innocent" purchasers?

vaio

bigjl wrote: »

This is getting boring already, do you really need me to explain what a "lein" on goods are.......

You don't need to explain what lien is but I would be interested in an explanation of what it has to do with the OP and/or the '74 Act which is very clear and deals with innocent purchasers and not lien holders.

bigjl wrote: »

.......Or do you not agree that Hire Purchase is a hire agreement for the purposes of the Act, if you read a HP agreement my position is that it is indeed a hire agreement.......

The clue is in the name (and has been confirmed in numerous court cases).....

A hire agreement is what it says, a contract for hire with no intention for transfer of title.

A hire purchase agreement is also what is says, a contract for hire with the intention that title transfers at the end of the agreement

bigjl wrote: »

.....If the finance company makes a loss it is just business, these things are factored into the business plan, and they will continue to try and get their money back from the person that signed the HP agreement, as a minimum they will get a CIFAS warning put on their credit file.

I think you are so wrong on this…..no way are a finance company going to give valid title away for less than the maximum achievable on the off chance they can later recover the money from the credit holder.

Apart from it just not being the way finance companies operate they also have a common law duty to the credit holder to mitigate their losses and maximise the return on the car.

If a company sold the title on a £10k car to you for £500 or a grand and tried to recover the outstanding £8k from the credit holder he could quite reasonably argue that the finance company should have got more for the car and the finance company would likely be unable to recover all the loss from him.

This is why repossessed cars and houses invariably go to auction/public tender which gives a clear open market value with no possibility of any accusation of underselling.