A large proportion of used car buyers have a misconception of who holds the legal title of a car on finance, a survey by motor technology provider HPI revealed.

The survey found that 42% of the used car buyers surveyed did not know who held legal title on a car that has finance owing on it.

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In addition, nearly a quarter of those surveyed (23%) responded that the car belongs to the person named on the Log Book. HPI believes that this figure highlights the extent of misconception amongst consumers.
If a consumer buys a car from a dealer that later turns out to have outstanding finance against, the person will be protected by Innocent Purchase Protection. However, if a dealer buys a car from a consumer who believes that he is the legal owner and still owes finance, the dealer will be liable if that consumer doesn’t keep up the finance payments.

"Although dealers buy in good faith, just as the general public do, they are not protected by Innocent Purchase Protection and need to gain ‘clear title’. Dealers, just as private buyers, stand to lose the car and the money they paid for it if it later turns out to have finance against it," writes HPI.

Neil Hodson, managing director for HPI said: "We always advise dealers to protect themselves by only ever buying from the registered keeper and urge them to ask the customer for photo ID. Payment for the car must be made into a bank account in the registered keeper’s name. If the car has just changed hands then it’s even more important to verify who is selling it and that their ID checks out. Following these guidelines will minimise the risk of buying a car with bad provenance."

 

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