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Car history expert Cartell.ie has warned of a sharp rise in the number of second hand cars for sale with outstanding finance payments still owing. According to Cartell.ie, the number of cars for sale from all available model years with finance still owing now stands at 9.6 per cent. In December 2014, that rate stood at 7 per cent, marking a 40 per cent rise in six months.
When you drill down into the figures for specific years, the situation worsens. For 2012-plate cars, the level has risen form 17.8 per cent last December to 21.4 per cent today. That's a one-in-five chance. For 2013-model year cars, 19.1 per cent still have money owing on them. The rate does drop off significantly the further back you go, falling from 6.8 per cent of cars from 2008 to barely one per cent from 2000.
John Byrne, Legal and Public Relations Manager, Cartell.ie, says: "Finance levels are now rising fast since reaching a low of around 7% in December 2014. This creates a treacherous terrain for a used car buyer as those who may have risked a purchase in the past without checking if a vehicle has outstanding finance stand a far higher risk of getting caught out in the current market." The issue, of course, is that if the previous owner of the car doesn't use the proceeds of the sale to clear the outstanding finance and defaults on their loan, then the finance company from which the loan was taken can repossess the car, regardless of the fact that you legally bought it and paid for it in full.
That finance company is now increasingly likely to be a division of a major car maker. According to Cartell.ie, while Bank of Ireland (on 21 per cent of the market) and AIB (on 18 per cent) are still the primary vehicle finance suppliers, they are being caught by the in-house banks, such as Volkswagen Bank (which currently holds 14 per cent of the total market) and BMW Financial Services (which holds 16 per cent). John Byrne says: "The market dynamics have changed significantly in the last five years. Banks such as BMW Financial Services and VW Bank - in-house banks, which rose to prominence as a direct result of the negative impact of the recession on market liquidity - are now booming. These results may correlate with the increasing popularity of PCP in the marketplace."