Car bought and sold with outstanding finance?
Discussion
Here is an interesting scenario I suddenly find myself in;
1. March 2008 purchase car by means of part exchange and cash from Performance Car dealer(1). I did not take out finance to purchase the car
2. October 2010 after 2 years of driving my car (above) I decide it is time for a change and part exchange with a different Performance Car Dealer(2)
3. November 2010 dealer(2) sells above original car to new customer
4. December 2010 dealer (2) contacts me to advise that his customer has now tried to sell the car and discovered that there is outstanding finance on it. This is news to me, however, in order to help I contact the finance company (details given to me by dealer (2) - the finance company confirm that the finance is on the original car 1 but is not in my name
5. The dealer I bought the car from in the first place is now in receivership
This financed car has now changed hands three times and each time in good faith with no one being aware of the finance.
Where do we all stand?
1. March 2008 purchase car by means of part exchange and cash from Performance Car dealer(1). I did not take out finance to purchase the car
2. October 2010 after 2 years of driving my car (above) I decide it is time for a change and part exchange with a different Performance Car Dealer(2)
3. November 2010 dealer(2) sells above original car to new customer
4. December 2010 dealer (2) contacts me to advise that his customer has now tried to sell the car and discovered that there is outstanding finance on it. This is news to me, however, in order to help I contact the finance company (details given to me by dealer (2) - the finance company confirm that the finance is on the original car 1 but is not in my name
5. The dealer I bought the car from in the first place is now in receivership
This financed car has now changed hands three times and each time in good faith with no one being aware of the finance.
Where do we all stand?
It is entirely the most recent dealers responsibility, and failure, to ensure that the car had no Finanace outstanding at the time they took the car from you (and sold it again).
You didn't know and had no reason to know. It's not your finance outstanding, and it's no-longer your car.
It is therefore not your problem.
You didn't know and had no reason to know. It's not your finance outstanding, and it's no-longer your car.
It is therefore not your problem.
This is supposed to be one of the benefits of buying from and selling to dealers - there are no finance risks. I would stop communicating with anyone about this - its history now to you and no point discussing it further. To do so would let them think they have a fishy to reel in and get money from.
Edited by GreigM on Thursday 6th January 10:09
GreigM said:
I would stop communicating with anyone about this - its history now to you and no point discussing it further. To do so would let them think they have a fishy to reel in and get money from.
Best bit of advice you'll get on this. It's strange that the finance company didn't track you down through the DVLA. Is the account in arrears? What value was the car? How much outstanding?
If it's only a small amount, dealer 2 might put it down to experience, or have wrongful conversion insurance to cover this sort of thing - however, the lack of an HPi cert will probably negate that.
jakwyn said:
According to the details i have been able to get from the finance co, the finance has not been paid since March 08 and is around 30k
That's a fairly serious amount of money. I would suggest that you do more than just stop communication. I would speak to a solicitor (you should get an initial meeting for free) and ask them to write a letter setting out the basics which will (as previously stated) politely inform dealer 2 it is not your responsibility. Will cost very little and could save you a lot of time in the long run.nottyash said:
Jo Po said:
I cant believe that a car of that value hasnt been HPI'd by several people. Crazy.
I only ever HPI a car when I buy private and have never from a dealer. Makes me think twice now.jakwyn said:
Thanks Greg
I do hope you are right just had a message from the dealer who i sold the car to that he has had to have the car back and therefore he is returning the car to me..........as you suggested i will not be making contact with him, just hope he doesnt turn up on my doorstep!
Did he ask you if there was finance on the car when you traded it in? And if so, what did you tell him?I do hope you are right just had a message from the dealer who i sold the car to that he has had to have the car back and therefore he is returning the car to me..........as you suggested i will not be making contact with him, just hope he doesnt turn up on my doorstep!
I part exchanged my car last week. All was going fine until the dealer did a quick HPI check on my car. "There are 2 outstanding finance agreements on your car sir" I was told! This was news to me, as I was assured by a main dealer when I bought my car that it was HPI clear.
Turns out that one of the finance agreements should have been removed from the file 2 years ago, and the other was a mis-type of the reg number. Luckily the dealer was able to get in touch with both finance companies and sort it out on the day.
Turns out that one of the finance agreements should have been removed from the file 2 years ago, and the other was a mis-type of the reg number. Luckily the dealer was able to get in touch with both finance companies and sort it out on the day.
Hi,
In law the origional owner (pre your ownership in 08) , the name the finance is in still owes the 30k debt to the finance house, the car legally still belongs to the finance house and they can take possession when ever they like. The only person who is intially is out of pocket is the current keeper im afraid.
If this was the case he would then sue car dealer 2, who would then either claim or post a joint defendance with you , and you would then claim against origional dealer, however as he is now liquidated you would have no one to claim against and the buck would stop with you with a registered debt in the courts-Unfortuante as you have one to sue as they no longer exist.
In this case the 2nd car dealer has taken the car back so he has the problem at the minute and is to be out of pocket if the fiancne house claim the car back. He will attempt to give it back to you, but you have no duty to accept, if the fiance claim it back he wil then sue you for the loss he had suffered. again you will loose out.
The only way you are safe is to make sure that the finance house takes possession of the car back when its not under your control (so you dont loose any immediate funds) OR the original fiancee pays off the finance.
this is the legal case, in reality all these court cases will never happen like this as its to complicated and involves to many parties following procedure and to many events that can happen to intervene. eg you going bankrup, the 2nd car dealer liquidating etc. Also the courts will se that as you sold to a dealer they have a implied duty to check hpi items etc and will hold in your favour.
My advice to you you is to keep in contact with parties but make it clear that you will not under any circumstances take possesion of the car, or part with any funds to car delaer that you may have paid to part ex.
In law the origional owner (pre your ownership in 08) , the name the finance is in still owes the 30k debt to the finance house, the car legally still belongs to the finance house and they can take possession when ever they like. The only person who is intially is out of pocket is the current keeper im afraid.
If this was the case he would then sue car dealer 2, who would then either claim or post a joint defendance with you , and you would then claim against origional dealer, however as he is now liquidated you would have no one to claim against and the buck would stop with you with a registered debt in the courts-Unfortuante as you have one to sue as they no longer exist.
In this case the 2nd car dealer has taken the car back so he has the problem at the minute and is to be out of pocket if the fiancne house claim the car back. He will attempt to give it back to you, but you have no duty to accept, if the fiance claim it back he wil then sue you for the loss he had suffered. again you will loose out.
The only way you are safe is to make sure that the finance house takes possession of the car back when its not under your control (so you dont loose any immediate funds) OR the original fiancee pays off the finance.
this is the legal case, in reality all these court cases will never happen like this as its to complicated and involves to many parties following procedure and to many events that can happen to intervene. eg you going bankrup, the 2nd car dealer liquidating etc. Also the courts will se that as you sold to a dealer they have a implied duty to check hpi items etc and will hold in your favour.
My advice to you you is to keep in contact with parties but make it clear that you will not under any circumstances take possesion of the car, or part with any funds to car delaer that you may have paid to part ex.
i would imagine that this whole thng is down to dealer 1. The original finance seller probabbly does not even knwo he stil owes the money. He wil have part ex his car with finance on it to the dealer, assuming that the delaer would pay off the fiance. the delaer then went bust befoe he paid the finance and pocketed the 30k he got for selling the car to you. This often happens, especially if the dealer is not to honest. If he knows he is going to go bust he can take part ex cars at what seems to be very good prices to you and then sell them before paying the finance and then liquidate.
Lesson here is WHENEVER you part ex a car that you have finance on make sure you get the delaer to settle it there and then and then check for yourself, other wise if he goes bust the next week, you loose!
Dealers wil often not agree to this though as the way they work is that they wil sit your ca on their forecourt and only pay the finace off when they have a byer for the car, this way it does not tie up capital.
Lesson here is WHENEVER you part ex a car that you have finance on make sure you get the delaer to settle it there and then and then check for yourself, other wise if he goes bust the next week, you loose!
Dealers wil often not agree to this though as the way they work is that they wil sit your ca on their forecourt and only pay the finace off when they have a byer for the car, this way it does not tie up capital.
I bought a CLS from a main dealer for cash.
Come sale time, potential buyer said there was outstanding finance on the car, I told him I had no idea about it and to contact the Mercedes Dealership I bought from, giving contact names etc, he turned up and bought the car so im not sure what was done to resolve?
It should be a requirement by law to supply a valid HPI certificate with a car bought from a dealership imo. I never thought a car would pass through the Mercedes network with existing finance.
Come sale time, potential buyer said there was outstanding finance on the car, I told him I had no idea about it and to contact the Mercedes Dealership I bought from, giving contact names etc, he turned up and bought the car so im not sure what was done to resolve?
It should be a requirement by law to supply a valid HPI certificate with a car bought from a dealership imo. I never thought a car would pass through the Mercedes network with existing finance.
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