Loans outstanding on 25% of 2008 cars

-Chris-

http://www.irishtimes.com/newspaper/motors/2010/0519/1224270649067.html

ALMOST ONE-QUARTER of cars offered for sale with a 2008 or 2007 registration have finance outstanding, according to a study by vehicle checking firm Cartell.ie.
Car finance differs from personal finance as, in many cases, the loan follows the asset, meaning the unsuspecting buyer of a car with outstanding finance may have the car repossessed.
Cartell.ie checked 5,906 Irish cars and found 26 per cent of cars registered in 2008 and 23 per cent registered in 2007 had loans attached. It is not clear how many were sold privately or otherwise.
While car finance terms differ, almost all mean the lender retains ownership and preclude a sale until the loan is repaid. The National Consumer Agency (NCA) said the issue highlights a lack of awareness about how car finance works.
A spokeswoman for the NCA said the standard position is the finance house buys the car from the dealer and hires it out to the new owner. “The consumer does not take ownership of the car until the last payment has been made.
“Someone selling a car on finance is breaching their agreement with the finance company. So if you buy a car that is still on finance, you simply don’t own it.”
A buyer then faces having the car repossessed, reaching a new arrangement with the lender or tracking down the seller to ask them to pay off the debt.
“Legally, a buyer cannot take full ownership of a car unless the person they are buying from has it, and you don’t get title until all loans are paid off,” said Alan Nolan, SIMI chief executive.
The absence of a document in Ireland showing who has legal ownership of a car contributes to the problem, he says. While reputable dealers will check for outstanding finance, people buying privately or from “the fringes” of the industry should always do their own, he warned.
Prospective buyers are advised to check the financial background of a car they are interested in with Hire Purchase Information or a vehicle checking company.
With most car finance running for between three and five years the percentage of cars offered for sale with loans declines in older vehicles.
Jeff Aherne, co-founder and director of Cartell.ie, notes one inconsistency with the trend: 2009.
“Only 15.6 per cent of vehicles from 2009 we checked were on finance.” One explanation for this is the recession made it more difficult for buyers to secure finance.

This is an interesting article from the Irish Times - makes it pretty clear that everyone needs to be doing their own credit checks on cars they've bought.

Is this a legitimate fear, or is it SIMI/Cartell propoganda do you think?

Cookie_Monster

-Chris- wrote: »

http://www.irishtimes.com/newspaper/motors/2010/0519/1224270649067.html
Is this a legitimate fear, or is it SIMI/Cartell propoganda do you think?

I think it legitimate, but all it takes is a simple check. Report said my car had finance on it, queried it with dealer before buying and found it was just due to a paperwork error when last owner transferred finance to his new car. sorted in 5 mins.

It's simply one more thing to be aware of when buying.

From my point of view owing finance on the car, its a bit off putting if I want to sell (which I am mulling over) as need to get in touch with the bank and hopefully they ok it and then let al perspective buyer know about it and so forth which may put them off.

endurodave

Its a pretty well grounded fear but its not a new thing just more of it now than before. As a rule of thumb you should always do your own checks on a car you thinking of buying.

johnplayerblue

SIMI/Cartell are becoming more and more like a cartel. A cartel increases individual members profits by reducing competition. Any time i read an article by either or both they seem to be scaremongering about people buying privately or from “the fringes” of the industry whatever the hell that means

Mr Benevolent

johnplayerblue wrote: »

SIMI/Cartell are becoming more and more like a cartel, a cartel thus increase individual members profits by reducing competition any time i read an article by either or both they seem to be scaremongering about people buying privately or from “the fringes” of the industry.

That's probably why Cartell.ie is eponymously named

recylingbin

Surely, most car loans are 3 or 5 years.
So it stands to reason that alot of cars from those years still have finance owed.

H8GHOTI

Most people get loans for 3-5 years. So the fact that cars sold 2 years ago have finance outstanding is not that surprising.
Edit: Good point recylingbin

I don't like that rule about finance following the car though & not the person who takes out the loan. The person who takes out the finance should be 100% responsible and we should be able to buy cars without worrying about it.

mickdw

In the case of those cars for sale with finance owing, there is no doubt that a large percentage of the sellers would be genuine & intend to clear the finance with the proceeds or be upfront with the buyer & allow the buyer to write cheque to the finance house. Still, there is a small % who would be hoping to scam the buyer & this does make buying nowadays very scary. Are the finance checks such as cartell fool proof? Does the fact that you pay cartell for the service mean that they are in some way liable if outstanding finance turned up once bought (i.e. if they missed the fact the finance was owing)

Mr Benevolent

recylingbin wrote: »

Surely, most car loans are 3 or 5 years.
So it stands to reason that alot of cars from those years still have finance owed.

I thought that too, but it does say '25% of cars for sale'.

Berty

How can somebody pay off the car loan until they sell the car that the loan is for?

All you need is a letter from the finance company assuring you they have no financial interest in the vehicle.

JHMEG

H8GHOTI wrote: »

Most people get loans for 3-5 years. So the fact that cars sold 2 years ago have finance outstanding is not that surprising.

Was gonna say the same thing. People probably got even bigger loans a few years ago as their houses were supposedly worth millions.

ShadowHearth

well it could be true... i wouldnt be surprised after all the sh*tstorm that country was in .

last years were bad, so alot of poeple got screwed, then cars got screwed...

Just if you buying a 07/08 car, you should deffo do a check.