THAT CAR COULD BE A DEBT-TRAP
HOW do you know if there’s outstanding finance on a car you buy second-hand – and why is it important that you do? Put simply, you cannot take what is known as ‘good title’ in an asset until the final payment has been made to a finance institution.
As it happens, the person selling the car is likely to use the money to make that final payment, but you’re taking a lot on trust. That’s why I’m always saying that the best few euro you’ll ever spend is on a health check with a vehicle data expert such as Cartell.ie, which offers a full vehicle history online for a fee, including a look at outstanding finance.
Its figures show that the proportion of vehicles offered for sale, across all model years, with finance outstanding is 18.3%, up from 16.6% in December 2018 and 11.5% in January 2017. This is the highest level yet recorded. You need to exercise even more caution with newer models, as Cartell found that more than 40% of two-year-old vehicles are offered for sale with finance outstanding.
Even older cars might bring problems, as 22.3% of all fouryear-old vehicles offered for sale last year had outstanding finance against them, and money was still owed even on some cars that were 10 years old because they were financed second-hand purchases.
‘Not only are finance levels the highest we’ve recorded, but the increases can be seen across the board,’ Cartell’s John Byrne said. ‘There could be many reasons for this, including new entrants in the finance market, better availability of finance, or, in the case of personal contract plan (PCP), buyers may be financing the balloon payment that falls due at the end of the term.
‘The headline figure of 18.3% overall is particularly concerning. Be cautious in the market, because you cannot take good title in the asset until the final payment has been paid to the financial institution,’ he said.