Selling a vehicle subject to a finance agreement – where does the buyer stand?

legal updates

In the era of the 'never-never' (or Hire Purchase as we now know it) the Government were concerned how easy it was for a HP Customer to sell on their motor vehicles to an unsuspecting buyer.

Read our disclaimer keyboard_arrow_down

This website content is intended as a general guide to law as it applies to the motor trade. Lawgistics has taken every effort to ensure that the contents are as accurate and up to date as at the date of first publication.

The laws and opinions expressed within this website may be varied as the law develops. As such we cannot accept liability for or the consequence of, any change of law, or official guidelines since publication or any misuse of the information provided.

The opinions in this website are based upon the experience of the authors and it must be recognised that only the courts and recognised tribunals can interpret the law with authority.

Examples given within the website are based on the experience of the authors and centre upon issues that commonly give rise to disputes. Each situation in practice will be different and may comprise several points commented upon.

If you have any doubt about the correct legal position you should seek further legal advice from Lawgistics or a suitably qualified solicitor. We cannot accept liability for your failure to take professional advice where it should reasonably be sought by a prudent person.

All characters are fictitious and should not be taken as referring to any person living or dead.

Use of this website shall be considered acceptance of the terms of the disclaimer presented above.

As is so often the case ‘it all depends’. 

In the era of the never-never’ (or Hire Purchase as we now know it) the Government were concerned how easy it was for a HP Customer to sell on their motor vehicles to an unsuspecting buyer but leaving the HP company able to repossess it since they held the legal title to it.  This led to the Hire Purchase Act 1964 (HP Act) which has safeguards for ‘private and innocent’ buyers. 

The HP Act allows good title to pass if a person is both a private buyer innocent of the fact that the car is the subject of a HP or Conditional Sale agreement.  What is of further interest is that the purchaser can be considered ‘private’ if they are not wholly or partly in the business of purchasing and selling vehicles or a finance company.  So, a vehicle repairerer could be considered a ‘private’ buyer.

The subject of special rules here only apply when the vehicle is the subject of a HP or Conditional Sale agreement. Some finance packages eg Personal Contract Purchase (PCP) and Lease Purchase are also classed as Hire Purchase.  The safeguards would not apply in the case of a simple fixed sum loan (secured or unsecured) or in the case of a lease/hire agreement.

In a nutshell, if the vehicle is the subject of a HP or Conditional Sale agreement then when it falls into the hands of a private and innocent buyer (not a car dealer) then that person will obtain good title.

ECSC Group plcMore Secure

On average 55 vulnerabilities are identified daily.

What can I do?

Review your organisations priorities and ask ‘can we afford a breach?’. What do I do during an incident? Who do I involve? When do I involve the ICO?

If you’re unable to answers these questions, you need help from the experts.

Dennis ChapmanIn remembrance of Dennis Chapman 1951 -2015Read More by this author

Related Legal Updates

While We Wait: Preparing for the FCA’s Review on Motor Finance Commissions

As anticipated, the FCA was not particularly helpful when questioned about the various issues of investigating complaints that were outside of the standard retention periods for documentation.

FCA Commission Review: Separating fact from fiction in the wake of scaremongering

Attend a complimentary seminar hosted by the FCA for first-hand information – Scheduled for Wednesday, 24 January 2024.

The FOS reports over 10,000 motor finance complaints: Are we really surprised?

The good news currently is the FCA is focussing its attention on the lender and not our members.

Assist your consumer… before it’s too late

If a consumer is ignored or refused assistance by you, and a repair is carried out, you will no longer be able to inspect the failed component.

The FCA means business

The FCA are closely monitoring how firms are putting their new rules in place and will take action against those that aren’t following them.

Car sold with a fault

Ensure the consumer is aware, understands, and most importantly, accepts the vehicle is subject to fault.

Financial promotion on social media

The FCA’s supervisory approach to financial promotions in social media was issued in 2015.

Get in touch

Complete the form to get in touch or via our details below:

01480 455500

Vinpenta House
High Causeway

By submitting this quote you agree to our Terms & Conditions and Privacy & Cookies Policy.

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.