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.

How do I check if a car is still under finance for free in Australia?

In Australia, there are several ways to determine whether the car you’re after is under finance without paying a fee. These include:

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. It also confirms 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.

It’s important to note that PPSR checks aren’t actually free, but they only cost $2.00. You’re likely to come across a variety of companies online purporting to offer PPSR or REVs checks. These are typically for a fee greater than 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

Some insurers, dealers or even private sellers may offer free PPSR checks as part of the purchase process. However, you may need to request this from the vendor and not all will offer them.

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’s outstanding finance and you still wish to buy it, you’ll need to arrange who’s responsible for paying it off. If they say that there isn’t any, it may still be worth going ahead with a PPSR check to be safe.

Inspect documents

This method may not directly reveal if a car is under finance. However, 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 a reputable provider. These are private companies that conduct in-depth reviews of vehicles for a fee higher than what you can expect to pay for any of the previous checks.

What happens if I buy a car with outstanding finance?

There’s no issue with buying a car under finance legally. If it’s properly communicated, the situation can be sorted out between you and the vendor. However, when it isn’t properly communicated, that’s where it can get a bit ugly.

Here are some of the things that might happen if you buy a car that’s still under finance without knowing about it:

1. 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.
2. Repossession: the lender can repossess the vehicle if the previous owner defaults on payments, even if you've paid for it.
3. Responsibility for the debt: in the worst-case scenario, you might become responsible for repaying the outstanding debt. Legal complications could also arise if the debt remains unpaid.

To avoid these risks, it's crucial to follow the steps we mentioned above. This is especially the case when buying a car from a private seller.

How to conduct a free state or territory car check

State and territory government transport agencies offer online services which allow you to check the registration details of a vehicle. These are useful to determine whether they’re currently registered and when it expires. 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:

• Australian Capital Territory
• New South Wales
• Northern Territory
• Queensland
• South Australia
• Tasmania
• Victoria
• Western Australia

What other checks should I complete before buying a used car?

Some of the other things you should do before buying a used car are:

• 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 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 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.