Sharp rise in number of people selling cars with repayments still outstanding
*New study shows that one-in-four three-year-old cars being put up for sale still have finance outstanding
* Buyers are being alerted to fact they could lose thousands as a car can be seized after they buy it
Published 08/06/2016 | 02:30
New figures show there has been a big increase in the number of people selling their cars with repayments still owed.
A new analysis by car-history website Cartell.ie, published today, shows that 29pc of cars being offered for sale in the one-to-three-old age group have finance outstanding.
Critically, those who provided the finance are entitled to seize the car as it is legally their property - not that of the seller or buyer.
The report serves as a timely alert with thousands of people expected to buy a new 162-reg plate from July 1 - and thousands more poised to purchase a newer used-car over the coming months.
While there are several possible, and partial, explanations for the increase in outstanding finance, a key reason is likely to be that people who bought cars on credit/hire purchase - especially in the last three years - can't meet repayments.
That would appear to be borne out most especially with:
* One-year old vehicles (2015-reg). The proportion for sale with finance outstanding has risen from 23pc for the equivalent period last year to 27pc so far this year.
* Two-year-old cars (2014-reg). There is a 28pc chance of a vehicle that is being offered for sale having finance owed.
* Three-year-olds (2013-reg). The statistics for this age group show buyers have almost a one-in-three chance (30pc) of purchasing one (2013) with finance outstanding.
If you innocently buy a car with repayments owed it can be seized by the financial institution and you will be at the loss of your purchase price.
That makes checking it out in advance an important part of the purchasing process.
John Byrne of Cartell.ie says: "Finance levels for cars offered for sale which are less than three-years-old are around 30pc.
"This means a buyer in the market for a relatively new car needs to be particularly careful."
He says the increasing levels of finance for newer cars may be attributable to the "prominence of PCPs".
However, he warns the potential exposure to loss for a buyer is huge.
I estimate that, given the cost of a three-year-old car, a buyer could easily face losing a five-figure sum.
Mr Byrne adds: "The finance house owns the vehicle until the last payment is made. You can lose the car if you purchase it with finance outstanding." He says overall finance levels are rising again after bottoming out in 2015.
The latest figures were compiled from a sample of 5,906 vehicles offered for sale and checked via the Cartell.ie website in 2016.
And they reveal that even older vehicles are regularly put up for sale with finance outstanding. For example, nearly 8pc (7.9pc) of 2010-registered vehicles being sold had outstanding finance.
Meanwhile, dealers are gearing up for a busy July with all activity centred on taking orders for new cars.
Few new vehicles will be bought throughout June but there is widespread expectation that July will break records for the month.