Car sellers warned to be wary of new finance scam

Motorists trying to sell their cars are being warned of a new scam being perpetrated by criminal gangs.

Vehicle data specialist HPI is reporting a rise in so-called “clearance fraud” where organised gangs of fraudsters target drivers trying to sell cars which may still have unpaid finance on them.

The con involves criminals identifying cars for sale which have outstanding finance agreements. They then contact the seller and offer to pay off the remaining balance.

However, the debt isn’t actually cleared and instead the vehicle is quickly sold on by the fraudster to unsuspecting dealers or auctions who are unaware that the car still has outstanding finance payments and interest against it.

Shocking statistics

Barry Shorto, head of industry relations at HPI, commented: “HPI checks reveal some shocking statistics. One in three cars checked has a hidden history, including outstanding finance, while 75 cars are identified as stolen every day.

“We wanted to highlight the shocking new clearance fraud trend so that consumers become aware. Unsuspecting motorists looking to sell their cars are being deliberately targeted by criminals who are able to tell that the vehicle is on finance and are attempting to appear helpful by offering to clear the finance on behalf of the seller.

“To protect themselves from this scam, the message to consumers is loud and clear – under no circumstances should a seller allow a potential buyer to pay off their outstanding finance. Always pay off the finance yourself, or if working with a dealership, ensure you have proof that any outstanding finance has been cleared before releasing the necessary vehicle paperwork and also the vehicle itself.”

Shaky ground

Selling a car with outstanding finance is against HP and PCP agreements as you don’t technically own the vehicle. To sell it you first have to end the agreement by informing the lender and paying off the settlement figure, plus any early repayment and administration fees.

However, fraudsters are targeting drivers trying to get around this by selling a car and using the proceeds to settle the agreement.

HPI says the scale of the issue is unknown but more than a dozen cases have been reported in London in recent months and one more recently in Scotland.

The scam is the latest in a series of elaborate vehicle frauds ranging from clocking and cloning to hire car scams and ringing, costing the motor industry and consumers hundreds of millions of pounds every year.