What Is an Encumbered Car & The Risk of Buying It?
17 February 2023
Encumbered car!! Is it a new term for you? Oh, well! We are here to guide you with all about it. So, an encumbrance car is a vehicle that was bought on loan or some financing option and the loan hasn’t been repaid fully yet. It could also mean that the car was used as collateral against a loan. So, regardless of the owner, the vehicle stays encumbered, until the loan has been repaired in full. What’s the sad part? There is no law that requires the car owner to disclose the encumbrance while selling the vehicle. This is why it is crucial to do a PPSR check to know if the car is encumbered or not.
What Are The Risks Of Buying An Encumbered Car?
One of the biggest risks of purchasing an encumbered car is that it can be repossessed by the new buyer to pay all the outstanding loan amount. After buying the vehicle, it will be the responsibility of the new owner to pay the loan. That is why you should always make an informed decision before buying an encumbered car.
How To Know If The Car Is Encumbered?
Ask! Yes, you must ask the owner of the vehicle if the car is encumbered or not. If you think you want more reassurance and proper genuine information, then look for other ways. The most reliable way to check if the vehicle is encumbered is to conduct a PPSR check. This will only cost you $2 per check and you can get the right information about the vehicle in no time. While conducting the PPSR check, you will get a document that will outline three categories, a single registration, no security interest, or multiple encumbrance registrations. Of course, the best situation is that the vehicle has none of those, which means that the car is free from any type of financial issues or encumbrance.
Please note: It is always a good idea to keep the PPSR document around, so in case anything happens, you have valid proof to show that the vehicle has no encumbrance when you bought it. In short, it is best to stay safe than to be sorry later.
Is a Great Deal Worth The Risk?
Congrats, that you have got a great deal on an encumbered car! Of course, you don’t want to miss it and deep down you know it is a risky affair. Wondering what to do in such a situation? Well, there are a few things that you can do to negate them. Let’s know about them in detail.
Firstly, you must have a meeting with the current owner of the vehicle to know if they are okay with doing business in the first place. In case, you feel that the seller is not genuine, then don’t initiate further.
Secondly, try to fetch more details about the encumbrance. Try to contact the creditor and know how much is the repayment. How exactly does the seller intend to repay the loan amount? In case the owner is willing to deduct the remaining amounts from the car’s total price, then it can be a great deal for you.
Lastly, don’t miss checking the PPSR report to get all the important details of the vehicle that you must know.
What Should I Do If The Car Is Repossessed?
Let’s be very clear! When you buy a car, you buy it with its existing loans or encumbrance on it. We have also mentioned that the seller is not legally obliged to tell you about the encumbrance. However, if you happen to fall into some trap, you can surely take the matter to the court but the decision will totally depend on your specific case.
The Bottomline
Buying encumbered vehicles does come with some associated risks. But, there are many ways you can prevent scams and fraud. So, be wise and make informed decisions.
If you want to sell your old, unwanted, or junk cars, then you can contact reliable and genuine car dealers who can provide instant cash for cars. So, get in touch with the Perth Scrap Car Removals, the best in Perth and its suburbs today to get the top dollar for your old vehicles.
