When a car is under finance, it means the previous owner hasn't fully paid off the loan or lease on the vehicle. As a result, the lender still holds a legal interest in the car.
If you're considering purchasing a used car in Australia, it's essential to find out whether there’s any outstanding finance on it before you sign on the dotted line.
Can I check if a car is still under finance for free in Australia?
Yes, if you apply for a car loan through Savvy, a Personal Property Securities Register (PPSR) check is included for free as part of the application process, so you won’t need to pay for it separately.
Previously known as a REVs check, a PPSR search is one of the most reliable ways to find out whether there’s a security interest registered against a vehicle, which may indicate finance is still owing, though it won't tell you the exact amount still owed. It can also tell you whether the car has been reported as stolen or written off.
There are other ways to check whether a car is still under finance, although some may come with a cost.
-
Conduct a PPSR check yourself for $2
You can run an official PPSR search yourself through the government's PPSR website using the vehicle’s VIN or chassis number. The search costs $2 and provides a certificate showing the results.
The government recommends running your search on the day of purchase, or the day before, particularly for a private car sale. Your search generates a time-stamped certificate, which can offer important protection if someone later claims a security interest in the vehicle after your search was completed.
-
Get a PPSR check through another company
You don’t necessarily have to arrange a PPSR search directly through the government website. Some insurers and other companies offer basic PPSR checks for free as a promotional service, though it’s important to check the small print to see what you’re signing up for.
If you want to dig further into the car’s history, you can use a third-party vehicle history provider. Providers such as Carify offer more comprehensive vehicle history reports that can include information such as odometer records, previous damage, registration details and market valuations alongside a PPSR check.
These broader reports cost a few dollars more than the official $2 PPSR search, but it gives you a more complete picture of the vehicle without forking out for a mechanic.
-
Ask the seller
You can also ask the seller directly whether there’s any finance owing on the car. If there is, ask how they intend to pay out the loan as part of the sale and whether they can provide evidence of the arrangement.
However, it’s still sensible to verify what you’ve been told independently. Even if the seller says the car is clear of finance, a $2 PPSR search can confirm whether a security interest is registered against it before you hand over your money.
Even if a seller provides you with a PPSR report, you may still want to run your own search close to the purchase date so you know the information is current.
What happens if I buy a car with outstanding finance?
There's no issue with buying a car under finance legally, provided everyone involved understands the situation and it's sorted out between you and the seller before the sale goes through.
If there is finance owing and you still want to proceed, ask the seller to obtain a payout figure from their lender and make arrangements for the debt to be cleared before or as part of the purchase. You may also want confirmation from the lender that the finance has been paid out and the security interest will be removed.
The bigger problem is buying a car with outstanding finance without knowing about it, which can expose you to two main risks:
- The car could be repossessed: if a valid security interest remains registered against the vehicle and the previous owner stops repaying their loan, the lender may be able to repossess the car even though you’ve already paid the seller for it.
- You could be left out of pocket: buying the car doesn’t generally make you personally responsible for the seller’s loan, but you could lose the vehicle and then have to pursue the seller to recover your money.
This is particularly important when buying privately, as you won’t have the same protections that may apply when purchasing through a licensed motor vehicle dealer.
How to conduct a free car registration check
State and territory government transport agencies offer online services that allow you to check the registration details of a vehicle in any part of Australia. These are useful to determine whether they’re currently registered and when they expire. They also confirm whether cars have been written off.
These services are available on official government websites and require the vehicle's registration number or VIN. You can find the required resource for car registration checks in your state or territory here:
What other checks should I complete before buying a used car?
Some of the other things you should do before buying a used car include:
- Physical inspection: have a look at the car yourself for signs of past damage or poor upkeep. This includes its interior, exterior, under the bonnet and tyres. You should also enlist a mechanic to conduct an independent inspection of the 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 ask as many questions as possible before you buy. These include things like 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.
