Before buying an encumbered car, it is essential to know precisely what it means. Metro Car Removal Sydney offers the following information on encumbered cars and the risks associated with them.
What Is Encumbrance?
A financial encumbrance on a vehicle means that there is some loan or financing option. Possibly, the owner took out a loan to purchase the vehicle, and it hasn’t been repaid. A financial encumbrance could also mean that the car was put up as collateral against a loan.
Can Encumbered Vehicles Be Legally Sold?
Yes. Although the owner owes money against the vehicle, the car can still be sold; however, the seller must disclose that the vehicle is encumbered.
What Is the Risk of Purchasing an Encumbered Car?
The most significant risk is that the vehicle could be repossessed from the new buyer to pay the outstanding loan balance. If the buyer was aware that the car was encumbered there is nothing the new owner can do.
What If You Think the Vehicle Is Worth the Risk?
If you feel that the vehicle is worth the risk, then there are steps to take before you purchase the vehicle.
Meet with the seller and discuss the purchase, getting to know the seller a bit. If your gut tells you that the seller is not trustworthy, then walk away.
Find out as much as you can about the loan. How much is the repayment? How does the seller intend to repay the loan? Can you trust that the seller will pay off the loan?
Contact the financial institution or financier involved to request details of the loan. You can find out the details in a PPSR report.
What Happens If the Encumbered Vehicle Is Repossessed?
If an encumbered vehicle is repossessed, knowing the vehicle was encumbered, you accepted the risk when you purchased it. However, you can take legal action against the seller. If you were not aware that the car was encumbered, you have a claim.
How to Quickly Find Out If A Vehicle Is Encumbered?
A PPSR report is the fastest way to find out if a vehicle is encumbered.
Car owners that would like to get their cars sold can do so with Metro Car Removal Sydney. We are leading cash for a car company in Sydney that will make you an offer today.
Give us a call at 0422 600 833
