The number of cars sold with finance still owed on them rose to one in three in the first four months of 2018, up from one in four during 2017, vehicle history database HPI, part of cap hpi, has said.

Some 2.4m vehicles in HPI’s database had been flagged as still having finance installments due on them as of April.

Cap hpi said this posed a higher risk of fraud on part of the dealer, which occurs if the new buyer is not informed of the outstanding finance.

The contracts involved could be not only vehicle financing loan, but also so-called logbook loans, where the vehicle is used as security for a loan, and legally becomes property of the lender until the debt is repaid.

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.”