How to Check If a Car is Under Finance?

Acquiring a car is a great life achievement, but it’s also a big financial choice that needs careful consideration, particularly if you’re buying a used automobile. In Australia, a critical step that should be considered is checking if the car is under finance. Not doing so can result in legal and financial issues since buying a car on finance could mean the financing company repossesses the automobile and leaves you without a car.

This comprehensive guide will explain why it’s important to check if a car is under finance, how to conduct these checks, and what to do if you discover the car you’re interested in is still under a financial agreement.

Why Check if a Car is Under Finance?

When a car is purchased using finance options, the financier typically holds an interest in the vehicle until the loan is fully repaid. The car is considered encumbered if the owner decides to sell the car before settling the debt without the financier’s consent. Buying an encumbered vehicle means you’re at risk of the car being repossessed if the previous owner fails to meet their loan repayments.

Thus, checking if an automobile is financed is essential to avoid financial and legal complications.

How do you check if a car is under finance?

Obtain the Vehicle’s Details

You will need the car’s Vehicle Identification Number (VIN), registration number, and engine number. The VIN is a 17-character number that uniquely identifies the vehicle. It’s usually found on the car’s compliance plate, chassis, or engine bay.

Use the Personal Property Securities Register (PPSR)

The government’s Personal Property Securities Register (PPSR) lists vehicles and other personal property with security interests. Conducting a PPSR check is the most reliable way to determine if a car is under finance in Australia.

How to Conduct a PPSR Check:

1. Visit the official PPSR website (ppsr.gov.au).
2. Select the option to do a “Quick motor vehicle search.”
3. Enter the VIN or chassis number, and proceed as directed.
4. Pay a small fee for the search.
5. Review the search certificate, which will indicate whether there are any financial interests recorded against the vehicle.
6. Contact the Financier

If the PPSR check reveals that the car is under finance, the search certificate will provide details of the financier. It’s a good idea to contact them directly to verify the information and understand the terms of the financial agreement.

What should you do if the car is under finance?

If you discover the car you’re interested in is under finance, take the following steps:

Speak to the Seller

Inform the seller about your findings. It’s possible they needed to be made aware of the financial encumbrance, or they are in the process of clearing the debt.

Request Proof of Finance Clearance

Ask the seller to provide proof that the finance has been cleared. This can be a letter from the finance company stating that the loan on the vehicle has been fully repaid.

Consider an Escrow Service

Consider using an escrow service to ensure the transaction is safe. This means a third party holds the purchase funds until the seller clears the finance against the car, protecting both buyer and seller.

Walk Away

If the seller cannot provide satisfactory evidence that the finance has been or will be cleared, it may be best to walk away from the deal. It’s not worth the risk of having the car repossessed.

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