There are people out there who desire to run their own car broker service. The trouble is that they lack the knowledge to do so. We’re an establishment that helps with this. We share our expertise in our Car Broker Business Package. It has modules to cover important topics, giving you a great learning resources as well as tools you can use going forward.
There is one simple but important point you need to be aware of in the world of used cars. You shouldn’t purchase a vehicle with outstanding finance. We intend to go through this topic here and discuss the finer details. Once we’re finished, you will know why buying a car like this is such an issue.
Leasing or financing
More than 90% of new motors and a large number of used cars are leased or financed. What this usually means is that the lender owns them during the loan or finance period. The leasing company or lender has paid the manufacturer or dealer a lump sum to purchase the car. Then, they set up a credit or hire agreement with the customer to spread the cost over a particular amount of time. Outstanding finance means someone hasn’t made all the repayments under the agreement.
There are two primary kinds of finance agreement. They influence whether you own the vehicle or not. Employing unsecured finance like a credit card or personal loan to buy a car will mean you own it from the first day. By using finance, such as Personal Contract Purchase or Hire Purchase, it is different. The lender owns the vehicle during the term until the buyer makes all payments.
Almost all the finance utilised to purchase cars these days is secured. All leasing agreements are also secure against the motor. This includes the likes of Finance Leases and Contract Hire. If you wish to learn how to start a car broker service, talk to us.
No legal right to sell
Let’s say you go to purchase a motor with outstanding finance. Here, the person selling it has yet to settle the finance sum they owe. It means the seller doesn’t own the car and lacks the legal right to sell it. Leasing agreements never come with an option for the lessee to own it. The car always has to be given back to the leasing business.
So, purchasing a vehicle with outstanding finance often results in its owner locating and repossessing it. If you buy one you will typically get a letter from the lender’s repossession agent. They will demand that you release the motor to them. You could lose the car and the money you paid to the seller.
You might be wondering whether you have any protection from the law if you purchase a car that has outstanding finance. In some instances, you do. Protection exists for ‘Innocent Private Purchasers’, like if you bought something from a dealership. When doing a deal with a private seller though, there are conditions you must meet to prove your innocence. The lender will usually move to recover their motor first. Afterwards, you’d have to prove your innocence to have a claim in keeping the vehicle. This would usually happen in court.
As for whether the person who sold the car would be committing fraud, the answer is yes. Selling a motor without owning it is conversion fraud. The majority of privately sold vehicles get advertised online. This is why it is essential to perform an outstanding finance check before you buy anything.
Succeed with us when you start a car broker service
At Auto Car Brokers, we aid people in starting a successful new career. Thanks to our products, you can get a great insight into the industry and how broking works. It won’t be long before you can start doing business.
So, if you want to offer a car broker service, we can be of help to you. Please browse our website or get in touch to learn more.