Warning On Used Car Fraud

As the Finance & Leasing Association (FLA) reports an increase in people fraudulently selling cars they do not own – otherwise known as conversion fraud - HPI has warned car buyers that if they purchase a vehicle on outstanding finance, they stand to lose both the car and the money they paid for it.

With one in four cars checked with HPI subject to an outstanding finance agreement, falling victim to finance fraud is sadly an ever increasing possibility.

HPI is urging used car buyers to be on their guard and avoid the latest finance scam triggered by the recession by checking the facts before they buy – or face the car of their dreams being repossessed by the finance house that rightly owns it.

Nicola Johnson, Consumer Services Manager for HPI said buyers need to be aware that some vehicle history checks do not include finance information which leaves them vulnerable to any type of finance fraud.

"The provision of a seller receipt or purchaser receipt will not offer legal protection for a buyer if the car later turns out to be on outstanding finance.

"The hard truth is that finance companies can and will take back their asset if a loan secured against it is defaulted upon."

According to the FLA almost 40% of all motor fraud cases in Quarter 3 of 2009 were people selling cars that had outstanding finance against them and therefore they didn’t own.

FLA said finance companies have reported an increase in the number of people selling cars before settling their outstanding finance. This is known as ‘conversion’ fraud and poses a real risk to used car buyers.

Paul Harrison, Head of Motor Finance at the FLA said: "We have seen conversion fraud increase, as some people look for an easy way out of financial difficulties by selling a car that does not belong to them.

"The FLA advises used car buyers to always conduct a vehicle check to ensure it is free from finance. A car with outstanding finance can be illegally sold without a finance company’s knowledge."

(PR/GK)