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If you're considering purchasing a used car in Australia, it's essential to check whether the vehicle is under finance before you sign on the dotted line. Learn about how you can check if a car is under finance in Savvy’s helpful guide.
What does it mean when a car has outstanding finance?
When a car has outstanding finance, it means the previous owner has not fully paid off the loan or lease on the vehicle, so the lender still holds a legal interest in the car.
While you can legally buy a car with money owing, several issues can arise:
- Ownership dispute: the lender retains legal ownership of the car until the debt is settled. This can result in an ownership dispute, as the seller might not have the authority to transfer ownership to you.
- Repossession: the lender can repossess the vehicle if the previous owner defaults on payments, even if you've paid for it.
- Responsibility for the debt: in the worst-case scenario, you might become responsible for repaying the outstanding debt, leading to unexpected financial obligations. Legal complications could also arise if the debt remains unpaid.
To avoid these risks, it's crucial to take steps before buying a car, especially from a private seller, to ensure the vehicle doesn't have any outstanding finance.
How do I find out if a car is still under finance for free in Australia?
In Australia, there are several ways to determine whether the car you’re looking to buy is under finance without having to pay a fee, including the following:
Personal Property Securities Register (PPSR) check
The PPSR, previously known as the REVs check, is a national online register that provides information about whether a vehicle has any existing debts or financial interests attached to it, as well as whether it’s been stolen or written off. All that’s needed is to simply enter the Vehicle Identification Number (VIN) or chassis number to access the report. A PPSR check costs $2.
It's important to note that you’re likely to come across a variety of companies online purporting to offer PPSR or REVs checks – typically for a fee greater than that of the actual PPSR. To avoid paying more than you need to for your vehicle finance check, you should visit the official PPSR website.
Free PPSR check through another company
While it costs $2 for a vehicle check via the PPSR site, some insurers, dealers or even private sellers may offer this for free as part of the purchase process. However, you may need to request this from the vendor.
Contact the seller
Before requesting a check, it's worth asking the seller directly whether the vehicle is under finance. Honest vendors will provide you with accurate information.
If they confirm that there is outstanding finance on the car and you still wish to buy it, you’ll need to arrange with them who is responsible for paying it off. However, if they say that there isn’t any, it may still be worth going ahead with a PPSR check to be safe.
Inspect documents
While this method may not directly reveal if a car is under finance, a thorough inspection of the vehicle's paperwork can provide valuable insights. Check the registration papers, ownership history and any associated documents for indications of outstanding finance. If something seems amiss, it's worth investigating further.
It's important to note that while each of these methods can help you determine if a car loan is still outstanding, they may not always provide other critical information such as the vehicle's accident history or odometer readings.
For a comprehensive understanding of a used car's condition and history, you may need to obtain a paid vehicle history report from reputable providers. These are private companies that will conduct an in-depth review of the vehicle for you for a fee higher than what you can expect to pay for any of the previous checks.
What other free resources can I use to check a car before I buy it?
State and territory government transport agencies offer online services which allow you to check the registration details of a vehicle, which are useful to determine whether they’re currently registered and when it expires. They may also confirm whether cars have been declared a write-off.
These services are usually available on official government websites and may require the vehicle's registration number or VIN. You can find the required resource for car registration checks in your state or territory here:
- Australian Capital Territory
- New South Wales
- Northern Territory
- Queensland
- South Australia
- Tasmania
- Victoria
- Western Australia
What other checks should I conduct before buying a used car?
Some of the things you should look to do before buying a used car are as follows:
- Physical inspection: have a look at the car yourself for signs of past damage or poor upkeep, including its interior, exterior, under the bonnet and tyres. You should also enlist a mechanic to conduct an independent inspection of your car for a more detailed report of its condition.
- Test drive: take the car for a spin before you buy it. This will give you a better feel for its handling and potentially unearth unusual sounds, lights flashing on the dashboard and other issues.
- Ask questions: it’s crucial to find out key details such as how many owners the car has had, why the current owner is selling it, if it’s been modified and whether you can check the car’s records.
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Bill TsouvalasFact checked
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