Car purchase possible outstanding finance

DjangoUnchained

Test drove  a car at a dealer yesterday it seemed good, made a deal put £1200 deposit on a car selling for £7200, they said they would service it, new mot and a couple of other little things. When i got home i found out that there was outstanding finance on it. Not wanting to buy a car with outstanding finance i phoned the dealer and they said not to worry they would make sure it is cleared. I said i want you to prove its cleared before i collect and pay the balance. They said they would try.
If they call me and say its ready and all been done, but i find out the finance hasnt been cleared am i right to reject it and demand my deposit back?

molerat

How do you think dealers finance their stock ?  Do you really think they have £500K sitting around to pay for the cars on the forecourt ?  They will be on finance, that way if the dealer goes bust the finance co can claim the cars, the dealer will clear it when it sells but until they get the money from you they can;t clear the finance.

DjangoUnchained

molerat said:

How do you think dealers finance their stock ?  Do you really think they have £500K sitting around to pay for the cars on the forecourt ?  They will be on finance, that way if the dealer goes bust the finance co can claim the cars, the dealer will clear it when it sells but until they get the money from you they can;t clear the finance.

im ignorant i guess, i thought they ran like most other businesses ie cashflow or credit. As its technically illegal to sell a car on finance as you're not the owner. If they buy a car that is already on finance do they not pay off the finance as part of the deal?  My concern is that if i buy a car that's still on finance the finance company still have title to it and can demand the payment or return of car?

Penguin_

DjangoUnchained said:

molerat said:

How do you think dealers finance their stock ?  Do you really think they have £500K sitting around to pay for the cars on the forecourt ?  They will be on finance, that way if the dealer goes bust the finance co can claim the cars, the dealer will clear it when it sells but until they get the money from you they can;t clear the finance.

im ignorant i guess, i thought they ran like most other businesses ie cashflow or credit. As its technically illegal to sell a car on finance as you're not the owner. If they buy a car that is already on finance do they not pay off the finance as part of the deal?  My concern is that if i buy a car that's still on finance the finance company still have title to it and can demand the payment or return of car?

Almost all main dealers finance thier new & used stock using Lombard financing or similar. They make payments each month to reduce the balance owed & then when they sell the vehicle they pay the balance & keep the rest.

Depending on timing they may not actually clear the balance for just over a month.

DjangoUnchained

Penguin_ said:

DjangoUnchained said:

molerat said:

How do you think dealers finance their stock ?  Do you really think they have £500K sitting around to pay for the cars on the forecourt ?  They will be on finance, that way if the dealer goes bust the finance co can claim the cars, the dealer will clear it when it sells but until they get the money from you they can;t clear the finance.

im ignorant i guess, i thought they ran like most other businesses ie cashflow or credit. As its technically illegal to sell a car on finance as you're not the owner. If they buy a car that is already on finance do they not pay off the finance as part of the deal?  My concern is that if i buy a car that's still on finance the finance company still have title to it and can demand the payment or return of car?

Almost all main dealers finance thier new & used stock using Lombard financing or similar. They make payments each month to reduce the balance owed & then when they sell the vehicle they pay the balance & keep the rest.

Depending on timing they may not actually clear the balance for just over a month.

being a bit paranoid, is there anyway to ensure that this will be done? what should i ask for for confirmation ?

Nearlyold

FYI here's a link to one of many lenders who provide stocking finance to dealers. https://www.closemotorfinance.co.uk/dealers/products-and-services/funding-your-forecourt

Penguin_

DjangoUnchained said:

Penguin_ said:

DjangoUnchained said:

molerat said:

How do you think dealers finance their stock ?  Do you really think they have £500K sitting around to pay for the cars on the forecourt ?  They will be on finance, that way if the dealer goes bust the finance co can claim the cars, the dealer will clear it when it sells but until they get the money from you they can;t clear the finance.

im ignorant i guess, i thought they ran like most other businesses ie cashflow or credit. As its technically illegal to sell a car on finance as you're not the owner. If they buy a car that is already on finance do they not pay off the finance as part of the deal?  My concern is that if i buy a car that's still on finance the finance company still have title to it and can demand the payment or return of car?

Almost all main dealers finance thier new & used stock using Lombard financing or similar. They make payments each month to reduce the balance owed & then when they sell the vehicle they pay the balance & keep the rest.

Depending on timing they may not actually clear the balance for just over a month.

being a bit paranoid, is there anyway to ensure that this will be done? what should i ask for for confirmation ?

As I said it may take a month for them to actually clear the finance depending on when their direct debit is taken so you don't have a way of knowing it will be clear when you drive off the forecourt. However if they are a reputable dealer you shouldn't have any issues as if they don't declare they've sold the vehicle, the auditor may find out & they could lose access to the finance.

DjangoUnchained

Penguin_ said:

DjangoUnchained said:

Penguin_ said:

DjangoUnchained said:

molerat said:

How do you think dealers finance their stock ?  Do you really think they have £500K sitting around to pay for the cars on the forecourt ?  They will be on finance, that way if the dealer goes bust the finance co can claim the cars, the dealer will clear it when it sells but until they get the money from you they can;t clear the finance.

im ignorant i guess, i thought they ran like most other businesses ie cashflow or credit. As its technically illegal to sell a car on finance as you're not the owner. If they buy a car that is already on finance do they not pay off the finance as part of the deal?  My concern is that if i buy a car that's still on finance the finance company still have title to it and can demand the payment or return of car?

Almost all main dealers finance thier new & used stock using Lombard financing or similar. They make payments each month to reduce the balance owed & then when they sell the vehicle they pay the balance & keep the rest.

Depending on timing they may not actually clear the balance for just over a month.

being a bit paranoid, is there anyway to ensure that this will be done? what should i ask for for confirmation ?

As I said it may take a month for them to actually clear the finance depending on when their direct debit is taken so you don't have a way of knowing it will be clear when you drive off the forecourt. However if they are a reputable dealer you shouldn't have any issues as if they don't declare they've sold the vehicle, the auditor may find out & they could lose access to the finance.

I dont want to take that chance. Ive told them i want proof its cleared before i pay the balance and collect it. They are a big dealer so they should be able to cover the finance even if its inconvenient for them and it annoys their accountant but from experience i find that once youve paid and taken possession dealers dont want to give you the time of day.

Alderbank

DjangoUnchained said:

Test drove  a car at a dealer yesterday it seemed good, made a deal put £1200 deposit on a car selling for £7200, they said they would service it, new mot and a couple of other little things. When i got home i found out that there was outstanding finance on it. Not wanting to buy a car with outstanding finance i phoned the dealer and they said not to worry they would make sure it is cleared. I said i want you to prove its cleared before i collect and pay the balance. They said they would try.
If they call me and say its ready and all been done, but i find out the finance hasnt been cleared am i right to reject it and demand my deposit back?

How did you find this out? HPI check?

It can take some time for HPI's records to be updated following the previous owner or the dealer paying off the finance. However as part of your HPI check you get the name of the finance house, their contact details and a reference number (no information about previous owner of course).
Call the finance house and quote the reference number. They will tell you (and confirm by email) that they have no further interest in the vehicle.

Can you reject the car?
You bought it face-to-face at the dealership so you have no legal right to reject for change of mind. However some dealerships offer additional rights above your consumer rights. Your dealer might offer something eg. 7 day satisfaction 'guarantee' but it might not be completely free (there might be an admin fee).
If the finance house confirms there is still outstanding finance after a week or so, get back to the dealer and say the car is not as described.

DjangoUnchained

From what ive read, it seems that it is illegal to sell a car with outstanding finance, as they are not the owner?

Alderbank

As above, why do you think it might have outstanding finance?