Ask an expert

I am looking at buying a used car.

Upon checking its registration however, I see it has been used to secure a loan.

Will this cease on change of ownership or will I have to get the previous owner to change the security of his loan?

Any help would be great thanks,

Tom

From the "Ask Jack" archives - 12 December 2009

Be very, very careful here.

We have had more cases than we ever imagined possible, where the seller has not paid off the loan.

In some cases the new owner has watched the vehicle being towed away under instruction from the finance company, powerless to stop them doing so.

You need a solid guarantee that this security will be lifted otherwise walk away from the deal.

A change of ownership does not give you legal entitlement or ownership of the vehicle, it is a paper trail of ownership only.

A finance company has the legal rights over the vehicle until the loan is settled.

I would be asking lots of questions of the seller to clarify this situation.

Ask for the name and contact details of the party holding the security on the car also. Talk to them to clarify and confirm what the seller is saying is correct.

Tom I repeat, be very careful and be prepared to walk away.