Around a third of used cars are bought on finance (HP or PCP). Until the agreement is settled, the finance company owns the car — not the person selling it. If you buy one with finance still owing, the lender can legally repossess it.
Why it is your problem, not the seller’s
You are not protected just because you paid in good faith (with one narrow exception for private buyers). The safest path is simple: do not buy a car with outstanding finance until it is cleared.
What to do
- Run a provenance check to confirm whether finance is recorded.
- If there is finance, ask the seller for a settlement letter from the lender.
- Ideally, pay the lender directly to settle, then the balance to the seller.
- Never pay cash up front against a "promise" to settle later.
No settlement letter, no sale. It is the single cheapest way to avoid the most expensive mistake.