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The headlines from car data company CAP HPI, said ‘Vehicle Finance Fraud On The Up’. Auto Express reported the same release from CAP HPI with the headline: ‘Third Of Used Cars Sold With Finance Still Owing’. Great headlines but fake news and something that makes me seriously angry!

Until I heard the expression ‘Fake News’, constantly being used by Donald Trump, I pretty much believed most of what I read but closer investigation of the release, put out by CAP HPI, has shown that the information released by them and reported on by Auto Express and others was simply a marketing ploy by CAP HPI.

Are a third of used cars sold with finance on them? Of course not, it’s a load of crap! Let’s look at the statistics. They first reported that 6 million cars were flagged as having finance on them in 2017. What does this mean? It means that out of all the searches that took place on HPI 6 million had finance on them.

They go on to say that in the first 4 months of 2018 2,437,025 searched vehicles had finance on them. So in pro-rata terms, the figure is up. Those figures actually mean absolutely nothing! The report doesn’t explain, as I suspect, that the figures could include multiple searches on the same car.

If you take your old car into a car dealer with outstanding finance on it the dealer will want a settlement cost from the funder and to do that, with permission from the customer, he will first, as a matter of course, carry out an HPI check.

In no way is that the customer trying to sell a car illegally it’s just normal process. And even then, having checked the car once on HPI, they will probably check again, just before parting with their cash to the lender, in the event that the customer has refinanced the car or taken out a further loan secured against it.

Not to mention the fact that the customer could have spoken to several dealers about a part exchange with each carrying out their own HPI check. They say themselves in the report: Fraudulent activity only takes place if the vendor tries to sell the vehicle with existing finance still owed, without letting the buyer know.

So to be clear the buyer does nothing illegal if he innocently buys a car with finance on, it’s the seller. And there is nothing in law that insists that buyers of used cars should check HPI as there is also nothing in law that insists that lenders list all finance agreements on HPI.

The only legal requirement on the buyer, for title to pass (for him to own the vehicle) is for him to ask the seller if he has the car on finance. If he says no you are entitled to keep the car. But this is what appears in the press release:

Commenting on the increase in used cars being identified as already on finance, Fernando Garcia, head of consumer at HPI said: “Buying a car with outstanding finance can land the unwitting buyer in trouble as most finance agreements or loans will grant the lender ownership of the vehicle until the debt has been paid. The debt stays with the vehicle not the borrower. Even if a buyer bought the vehicle in good faith, if the finance hasn’t been settled then the lender could repossess the vehicle, meaning you could lose the car and the money you paid.”

This disgraceful comment is legally incorrect and may cause me to raise an official complaint with Trading Standards. Why did they make this statement? Read what Mr Garcia said next:

Fernando Garcia added: “The first thing any used car buyer must do is ascertain whether the potential purchase is actually paid for. It’s impossible to tell if a vehicle has outstanding finance just by looking at it, which makes a vehicle history check an even more vital form of protection for buyers. An HPI Check can help protect consumers from buying a vehicle with something to hide, saving them cash as well as keeping them safe.

“Comprehensive, accurate and up-to-date car check data with a £30,000 data guarantee, the HPI Check gives protection from buying a vehicle with outstanding debt such as logbook loans and car finance plus is the first line of defence against car scams and motor fraud, including stolen, cloned and clocked cars.

This is clearly an attempt to get more naïve car buyers to use their HPI checking service and increase their income. Putting the frighteners on like this is wrong. Certainly, draw drivers’ attention to the benefits of checking a car’s history before buying but don’t twist statistics to mean something they don’t and certainly don’t suggest that lenders can repossess the car when the new owner is an ‘innocent buyer’ and therefore legally owns the car.

An innocent buyer could voluntarily hand over the car keys, in which case he can’t get the car back. Let me explain something, if you buy your car from a car dealer, trader or company you are protected because they can only sell you a car if they have clear title. If they sell you a car that is on finance, that is their problem not yours.

The only risk is if you buy from a private individual and again title passes if the seller says that he has no outstanding finance. The exception is a car that is on rental, could be a daily rental owned car or a car on contract hire. In which case the seller won’t have a V5C (log Book) with his name in it as the owner/keeper of the car.

This type of fake news could cause innocent buyers of cars to lose their cars when in fact they have good title, it’s a disgrace. By Graham Hill