How to buy a car currently under finance

Plans

What you need to know to plan a purchase


If you are buying a used car from a private seller, there are a number of things you need to check out before making an offer. One of those things is whether money is still owed on the vehicle. You can begin by simply asking the seller, however you should also double check by visiting the Personal Property Securities Register (PPSR). They can let you know if money is owed, or if the car was written off by an insurance company.

Buyer options

If you buy a car with money owing on it, the financier may be entitled to repossess the car.

If you find out from a private seller that money is owed after you do the car finance check, and you are still keen to proceed, you have a couple of different options.
  1. Ask the seller to pay off the debt before you purchase the car (making sure that you check with PPSR again before you make payment).

  2. Buy the car for the agreed amount, taking into account the payout figure. If you choose this option, you need to take the necessary steps to protect yourself. Have the seller request a dated payout quote or letter from their financier. The seller should be able to organise to have this letter sent directly to you. As the buyer, you can then write two separate cheques – one made out to the financier for the payout figure, and one made out to the seller for the remainder of the agreed price (if there is a remaining amount). At this point you can arrange for a transfer of ownership.

Remember that there is always some risk involved when buying from a private seller. Be sure to research used car buying guides so that you are armed with as much information as possible before you set out.

If you enjoyed reading this article, why not share it?

Simply copy and paste the text and include a link to the article. Please read the Expertise Articles Terms of Use before sharing.

Car finance and sourcing services are provided by Macquarie Leasing Pty Ltd ABN 38 002 674 982 Australian Credit Licence No. 394925 (Macquarie Leasing). All applications are subject to the satisfaction of approval criteria. Terms, conditions, fees and charges apply.

Any information or advice contained on this website is general in nature, is not an expression of opinion or recommendation, and has been prepared without taking into account your objectives, financial situation or needs. Before acting on any information or advice on this website, you should consider the appropriateness of it (and any relevant product) having regard to your circumstances and, if a current offer document is available, read the offer document before acquiring products named on this website. You should also seek independent financial, accounting and tax advice prior to acquiring a financial product.