My Car Check has revealed that a third (32.17%) of all finance checks it conducted in the first half of 2015 flagged up active finance agreements.
The consumer vehicle data provider said that the likelihood of a used car buyer falling victim to an outstanding finance issue has risen dramatically in recent years.
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Roger Powell, head of CDL Vehicle Information Services – My Car Check’s parent company- said: "While innocent purchasers can and do fall foul of traditional threats like clocking, there is at least a decent level of awareness about them. By contrast, there is a serious lack of awareness about the risk of buying a second hand car with second hand debt. We need to get the message out that outstanding finance is now by far the most common pitfall awaiting UK used car buyers.
"Certain types of agreements, such as the increasingly popular Personal Contract Purchase (PCP), usually involve the debt being secured against the vehicle, rather than the individual. This means a lot of the cars on our roads actually belong to a finance company, not the people who drive them. Attempting to sell a vehicle owned by a finance company, an activity called sub-hiring, is illegal, but very common. Some sellers do it knowingly. Others wrongly believe that everything will be fine if they keep up the payments. The crux for buyers is that the finance company can be within their rights to seize the vehicle back."
Asset conversion fraud is one of the top six priorities for the FLA Motor Fraud Group this year, concentrating in particular where and how the asset is being exchanged illegally.
Andy Thomas, director of recoveries and litigation for motor finance at Moneybarn, recently told Motor Finance that a significant proportion of asset conversion enquires to Moneybarn relate to cars being sold through popular auction websites.
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By GlobalData"Thirty-six per cent of our asset conversion enquiries are known to relate to our asset being sold through either eBay or Gumtree. A further 10% of enquiries were advertised through multiple media, but it’s likely at least some of these were converted through the eBay or Gumtree medium, suggesting approximately 40% of our asset conversions are processed through one of these auction websites.Sadly, in 65% of cases it’s the customer, or purchaser, that loses out," said Thomas.
