One-in-seven vehicles for sale has repayments still owing and could be seized

THE number of cars being offered for sale with repayments still owed has soared by 25pc in the past year, leading to fears that many people can’t cope with the level of finance on their vehicles.

New figures obtained by the Irish Independent reveal that one-in-seven cars now for sale does not belong to the person selling them and are still owned by a lending institution.

These cars would typically be in a personal contract plan (PCP) or on a hire-purchase agreement.

The danger is that if you bought such a car, the finance company could seize it and leave you at the total loss of your purchase money. Technically the car belongs to the finance company until the last payment is made.

Being caught out like that could mean losses running to tens of thousands of euro. For example if you bought an average 2014-reg car and it was seized, you could be €10,000 out of pocket.

The startling figures were compiled for this newspaper by vehicle data expert Cartell.ie.

They show how financially compromised cars are now running at 14.3pc (across all years), which is a sizeable jump on the level of 12.5pc in July. The corresponding figure for last January was 11.5pc. And the number back in December 2014 was just 7pc – half the current level.

According to the Cartell. ie report, the overall levels of finance have increased 24.3pc since January, and 51pc since June 2016 when the rate recorded was 9.5pc.

On the face of it, the figures suggest that thousands of people are struggling to meet their repayments under deals such as PCPs.

Experts suggest that is the case in a proportion of instances. But they also stress the fact that many drivers are testing the waters to see what sort of price they would get for their vehicles to compare with the guaranteed minimum future value (GMFV) they have in their PCP plan.

Obviously the more they can get above the GMFV the more equity they will have in the car at the end of their PCP deal. That would mean they would have to raise less money to begin a new plan, or have cash to spare.

However, the fall in usedcar prices due to a flood of cheaper imports – by as much as €2,000 for an average family car – is a further complicating factor in terms of establishing what a car is worth on the open market.

Thousands of people are struggling to meet their repayments under deals such as PCPs

John Byrne of Cartell. ie, said: “These are very significant jumps. To give you some idea where we are coming from, the levels of finance outstanding was 7pc in December 2014 – meaning the rate has doubled in three years.”

He urged potential buyers to check for outstanding finance.

He warned: “The bottom line is that you can lose the vehicle.”

While the increase has been dramatic, the percentage levels are still a bit behind historic highs back in 2008 and 2009.