Check for money owing before you buy that car

Would you ever buy a car without checking that it has money owing on it?

Would you take the seller’s word for it?

From time to time, people unwittingly buy cars that have money owing on them only to find the vehicle gets repossessed by a finance company who had registered a security interest over the vehicle.

They end up losing twice, they lose the car and they lose the money they paid for it.

A Purchase Money Security Interest (PMSI) that is registered on the Personal Property Securities Register works a bit like a mortgage over your house. It allows the person who has registered the security interest to sell the vehicle to fund any arrears on the loan.

So if you are considering buying a car or any other high value personal property that has been listed on Trade Me, you should always check whether money is owing.

You can do this by searching the PPSR.

You can also use Trade Me’s MotorWeb service, which will not only tell you about money owing but allow you to check that the car is not stolen, the number of previous owners, odometer consistency and a bunch of other things.

One of Trade Me’s terms and conditions is “if you are selling a car on Trade Me, you are required to ensure that the buyer of the motor vehicle takes the motor vehicle free of any security interest, and you must disclose in the listing whether there is any security interest over the vehicle.”

In plain-speak, this means you may list vehicles that have money owing on them, provided that potential buyers are informed in the listing body, and the security interest is paid off before the car changes hands.

Unfortunately, if you do have a vehicle that is repossessed due to money owing on it, your options are very limited:

• You can seek a refund from the seller – this can be a very difficult process as often the kind of person who sells a vehicle with money owing is not a considerate or responsible person. Ultimately you can take the seller to the Disputes Tribunal where an independent adjudicator can make a judgement in your favour.
• You can negotiate with the person who authorised the repossession of the vehicle, such as the finance company. One option to consider is paying off the debt, but do you really want to pay twice?

Motor Vehicle Traders (MVT) must also disclose in the Consumer Information Notice (CIN) whether there is a security interest over the vehicle. When this is the case and the (MVT) has not disclosed this, the buyer takes the vehicle free of any encumbrance.

To summarise:

• vehicles with security may be listed on Trade Me if the security is disclosed
• potential buyers should check the PPSR for a registered security
• MVT must disclose a security on the CIN.

Creative Commons image used courtesy tiffany terry on Flickr.