The Risks of Buying a Car with Finance Owing

Buying a car is exciting. And if we save money buying a used car - that's wonderful. You can get a good car at a cheaper price than a new one. But there’s something many people forget to check — finance owing.

When a car still has money owing on it, it means the seller hasn’t finished paying their car loan. If you buy that car, you could lose it, even if you paid full price. Lender has the full right to take the vehicle away.

Why this happens, how to avoid it, and what you can do to protect yourself when buying a used car in Australia.

What Does “Finance Owing” Mean?

If someone buys a car with a loan, the bank or finance company keeps an interest in the car until the loan is fully paid. That’s called an encumbrance.

If the seller doesn’t finish paying the loan, the finance company can still take the car — even from the new owner!

You can read more about this here:
Buying a Used Car? Watch Out for Hidden Encumbrances

What Can Happen If You Buy a Car with Finance Owing?

If you buy a car that has finance owing, here’s what could go wrong:

• The finance company might take the car back

• You might lose all your money

• You could be left without a car

• You may need to go to court to fix the problem

• The seller may disappear, and you can’t find them again

It’s not fair, but the law says the finance company has the right to get their money back. That’s why you need to check before you buy.

Real Life Example

Let’s say Jack buys a car from someone for $12,000. The car looks fine. Jack pays in cash, but he doesn’t check the finance status.

A few weeks later, someone from the finance company calls and says the car still has $6,000 owing. Jack is shocked. A few days later, the car is taken away by a repo truck. Jack loses the car and his $12,000.

Don’t let this happen to you.

Signs That a Car Might Have Finance Owing

Here are some warning signs:

• The seller wants fast cash

• The price is too good to be true

• The seller doesn’t give you the VIN

• They say “Don’t worry, I’ll pay the rest later”

• They have no loan documents or proof of payment

Always do your own check, even if the seller seems honest.

How to Check If a Car Has Money Owing

You can find out if a car has finance owing by doing a PPSR check. This is a report that tells you if a car has:

• Finance owing (an encumbrance)

• Been stolen

• Been written off

• Has a serious accident history
  
  

Here’s how to do it:

Step 1: Get the VIN

The Vehicle Identification Number (VIN) is a 17-digit code that identifies the car. You’ll find it:

• On the registration papers

• Near the engine

• On the car dashboard (near the windscreen)
  
  

Make sure the VIN on the car and the papers match.

Step 2: Use a Trusted Website

Once you have the VIN, go to one of these trusted Australian sites:

• Vin Check

• Revs Check Online

• PPSR $2 search

You’ll pay a small fee, and they’ll give you a full report in minutes.

Step 3: Read the PPSR Report

The report will tell you:

• If the car has finance owing

• If the car has been written off

• If the car is safe to buy
  
  

If the report says “No encumbrance”, that means there is no money owing — and it’s safe to buy!

Want more help? Check this blog:
How to Check If a Car Has Money Owing Before You Buy

What to Do If the Car Has Finance Owing

If you do a check and find the car still has finance owing, here’s what to do:

• Don’t buy the car yet

• Talk to the seller and ask them to pay the loan first

• Ask for proof that the loan is paid off (a payout letter)

• Do another PPSR check after they clear the loan

If they refuse, walk away. There are lots of good used cars for sale. Don’t risk losing your money.

Don’t Just Trust the Seller

Even if the seller is friendly, don’t skip the check. Some people may lie or not even know that their car has finance owing.

You can learn more about common car-buying mistakes here:
5 Mistakes That Could Lead You to Buy a Stolen Vehicle

Final Safety Tips for Buying a Used Car

Here’s a quick checklist to follow:

• Ask for the VIN

• Do a Vin Check, Revs Check, or PPSR Check

• Read the PPSR report carefully

• Ask for proof of loan payment if there’s finance owing

• Get a written receipt when buying

• Make sure the seller’s name matches the rego papers

Final Words

Buying a used car is a great way to save money — but only if you do it safely. Never skip checking if there’s finance owing on the car. It only takes a few minutes, but it could save you from losing thousands of dollars.

Use trusted websites like:

• Vin Check Qld

• Revs Check Qld

• PPSR Check
  
  

Do your research. Hope this post will keep new buyers stay safe.