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Motorists are on alert today as a new report warns that large numbers of second-hand cars are being sold with refunds pending.
More than a third (35%) of the three-year-old cars offered for sale have “pending financing.”
The trend is highlighted by automotive history experts Cartell.ie.
They warn that if you buy one of these cars, you face the prospect that the lender to which the money is owed will impound the vehicle. That means you will lose the car and what you paid for it.
Lenders are legally allowed to take the car and leave you with nothing even if you have paid thousands of euros.
The findings – and the caveat – are based on the most recent sample of around 5,906 vehicles offered for sale and verified through the Cartell.ie website.
In the case of three-year-old cars, there was a 35% chance that a vehicle would be offered with outstanding refunds.
Experts also found that 34% of year-old vehicles offered for sale had overdue refunds. “This means that there is now a one-in-three chance that a one-year-old vehicle will be offered for sale with financing pending,” the report says.
Even older vehicles are regularly offered with similar financial addendums, according to the report. It can work up to 21% of all four-year-old vehicles.
The trend suggests that a proportion of people are trying to sell cars that they can no longer afford. But there is also a high probability that many motorists, usually those with PCP (personal contract plans), are testing the market to assess what they can get for the car before their next plan.
They may be looking for someone who is willing to pay substantially more than the Guaranteed Future Minimum Value (GFMV) that they have agreed to under their current PCP arrangement, for example. They could then use the increased “offer” as a lever to obtain a higher trade-in value when negotiating their next or impending PCP deal.
However, the threat to some unscrupulous potential buyers is that unscrupulous sellers may be trying to get a quick bang and grab the money and run.
Jeff Aherne, Innovation Leader at Cartell.ie, cautions: “Buyers are strongly advised to be cautious in the marketplace as a good title to the asset cannot be obtained until the final payment has been paid to the financial institution. . This means that you may be buying a big problem. “
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