If you’ve bought a used car from a private seller, they should always have what is known as ‘legal title’, essentially meaning that the seller should have the legal right to sell the vehicle. If you have discovered that the car has outstanding finance attached to it, it is likely that it may have been sold without legal title.
It may be that the seller of the car, with intention to do so, has not fully paid off outstanding finance to assume ownership, or that this process has been delayed with the finance company.
If you have acted in good faith and were genuinely unaware of the outstanding finance, you may wish to present an argument to the finance company if they approach you, indicating that you are an innocent purchaser of the vehicle and feel that you have ‘innocent title’ to the car.
Where should I start?
You may also wish to contact the seller to find out if they have settled the finance or are in the process of doing so (try and getting written confirmation of this). If the finance company is looking to take the car back, or is seeking payment of outstanding finance, you may wish to suggest that any debt be pursued against the individual responsible (the debtor) and not you as an innocent purchaser.
You may have rights against the seller of the vehicle if they did not have the legal right to sell the car to you. Cars with outstanding finance are usually owned by the finance company so they cannot be legally sold by a business or private seller.
What about the finance company?
While it’s up to the finance company to prove that you don’t have ‘good title’, you may wish to contact them and explain your situation. It would be best to do this as soon as possible, and to follow this up in writing. Remember to include details of the seller, the date you bought the vehicle and any proof of purchase that you might have. If you have the original advert for the car then you could include a copy of this as further evidence.
What can I do if the car is taken away from me?
If the car is removed, and you believe that you have good title to the car, you should contact the finance company first and complain via their formal complaint’s procedure. If you have exhausted the finance company’s complaints process, your next step would be to contact the Financial Ombudsman Service who may look at your complaint further.
If the car has been taken away by the finance company, you should also contact the seller as soon as possible, ensuring that you make it clear that you didn’t feel they had the right to sell you the car. You may be able to ask for a refund and you may be able to request any additional losses that you might have incurred if you can support this claim with evidence.
It is always advisable to complain in writing and to send it by signed for mail, or by email with read receipt, as this will allow you to track the postage / delivery to confirm that it has been received. You should allow a reasonable timescale for a reply.
I hope this helps and you get the situation resolved!