# Bought Car Without Knowing It Was on HP



## JoeHooker (4 Dec 2007)

Hi, 

I purchased a new car in May i think of the year gone, from a guy, and payed part cash part bank draft for the car. I collected the car, got all the manuals and keys, filled in my details on the VRC for him to post it off. Meanwhile almost 3 months later my misses whilst driving home one night took a spin and ended up writing the car off. 

I went through the insurance and settled with them for a cut off what i had paid for the car. Thats fine until the other day i recieved a phone call, from the insurance company, they are trying to close the case on the car but there is still outstanding finances on the car with a well known Bank. But i never agreed to take over any finances and at the time i never even looked into the finances on the car, i did get a Garda mate to check it out and he said it was sound. 

I got in contact with the bank, they wanted my details, a copy of the VRC to prove that the vehicle was transfered to me, now i dont have the VRC since i gave it to the insurance company when they wrote the car off, but they are sending me a copy of it to send to the bank. I think there is an investigation on into the finances owed by the client of the Bank. 

My question is does anybody know where i stand with this, should i be worried or is it up to the bank to reclaim these finances from the previous owners since they did give them the car, i'm sure they also have an address for the person i bought the car off.


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## RS2K (4 Dec 2007)

*Re: Bought Car Without Knowing It Was on HP!*

I think you could have a big problem if the HP co. owned the car.

A bit late now, but why didn't you run a data check on it?


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## Thrifty (4 Dec 2007)

*Re: Bought Car Without Knowing It Was on HP!*

I think (don't know how successful you will be) that you need to advise the hire purchase company that you were a 'bona fide purchaser for value. Basically that you bought the car for a fair price unaware of the hire purchase agreement. It's up to the hire purchase company whether they accept this or not and decide to pursue the previous owner. Trouble is legally you could be/ are probably liable


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## Marie (4 Dec 2007)

*Re: Bought Car Without Knowing It Was on HP!*

Unfortunately if you buy a car with outstanding finance you become liable for its discharge.  You are the registered owner of the vehicle.  Finding out if a vehicle is clear of any encumberances is one of the purposes of having a vehicle check done in advance when purchasing second-hand.  I was in the position once of having put a deposit on a lovely second-hand car.  When the RAC ran a check they found there was outstanding finance.  I walked away.  Lost my deposit but didn't inherit the outstanding repayments.


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## scuby (4 Dec 2007)

*Re: Bought Car Without Knowing It Was on HP!*



Marie said:


> Unfortunately if you buy a car with outstanding finance you become liable for its discharge.  You are the registered owner of the vehicle.  Finding out if a vehicle is clear of any encumberances is one of the purposes of having a vehicle check done in advance when purchasing second-hand.  I was in the position once of having put a deposit on a lovely second-hand car.  When the RAC ran a check they found there was outstanding finance.  I walked away.  Lost my deposit but didn't inherit the outstanding repayments.



think it's the same story if you end up buying a car that was stolen... original owner gets the car and you lose the cash...


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## Brendan Burgess (4 Dec 2007)

*Re: Bought Car Without Knowing It Was on HP!*

Hi Joe

You bought a car owned by a bank.

You paid money to someone who did not own the car. That is not the bank's fault. It's yours unfortunately, so you will have to pay the bank. 

You can sue the guy who the money from you fraudulently.

Brendan


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## jbbcie (6 Dec 2007)

*Re: Bought Car Without Knowing It Was on HP!*

This seems a crazy situation to me.  Now, I can well understand a finance company repossessing the car from the unsuspecting purchaser in the event of the seller defaulting payments.
What I don't understand is how the new car owner can immediately become liable for an agreement that they never signed.  The seller broke the law by selling the car and not settling with the finance company.  So the seller should be pursued, not the poor buyer.
Yes, we can argue that people should do a HPI check, but it's not a requirement of purchase either.  If it was, it should be the responsibility of the seller to produce a HPI report.  I actually think that should be made law, but that's another matter.
Someone please explain to me how someone can become liable to a finance agreement that they did not sign or weren't aware of.


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## Thrifty1 (6 Dec 2007)

*Re: Bought Car Without Knowing It Was on HP!*

Like Thrifty said above, as far as i am aware you can argue you were a "bone fide purchaser for value without notice".

This is where an innocent party purchases property without notice of anothers party's claim to the title of it.
This is subject to certain restrictions - transaction must be properly recorded, all reasonable checks must have been made , etc.

But if successful the bank may pursue the seller of the car rather than the purchaser. Worth a shot.


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## Thrifty (6 Dec 2007)

*Re: Bought Car Without Knowing It Was on HP!*

Jbbcie, i know it sounds unfair but the nature of a hire purchase agreement is that the car is not owned by the other person until its fully paid for. Its like a secure loan on the car in a way - so the debt remains with the car. i really think somethink should be introduced where a hire purchase provider is required to have their interest noted on the car documents so that a purchaser can see they have an interest in the car and can resolve this before buying or walk away.


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## peno (6 Dec 2007)

*Re: Bought Car Without Knowing It Was on HP!*

If the bank noticed anything sooner I'd suspect teh original owner is still payign the repayments to the bank? i.e. the original owner still acknowledges he owes the bank and is paying it off as he originally agreed.

A simple solution to this is that the original owner will continue to pay the bank. If you can discuss this with the bank and maybe with the original owner it may help stop a lot of stress. I'm sure its waht all parties would like. The bank get there money, you are not liable and the original owner is not brought to court by you.


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## aircobra19 (6 Dec 2007)

*Re: Bought Car Without Knowing It Was on HP!*



jbbcie said:


> ....
> Yes, we can argue that people should do a HPI check, but it's not a requirement of purchase either.  If it was, it should be the responsibility of the seller to produce a HPI report.  I actually think that should be made law, but that's another matter.
> Someone please explain to me how someone can become liable to a finance agreement that they did not sign or weren't aware of.



[SIZE=-1]What is it they say? Ignorance is no defence in law.[/SIZE]


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## zag (6 Dec 2007)

*Re: Bought Car Without Knowing It Was on HP!*

There is a bit of a process gap here, surely.

If the registration and ownership documents for the car indicate that Joe Customer is the reigstered owner of the car, then why should a potential purchaser need to estabish how the owner funded the purchase ?  The official document in front of the potential purchaser clearly states that Joe Customer is the owner of the car.

If the bank owns the car, then logically they should have their name recorded on the document as the owner.  Or, like a mortgage deed, have Joe Customer down as the owner, but with the bank having a claim over the asset.

z


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## oopsbuddy (6 Dec 2007)

*Re: Bought Car Without Knowing It Was on HP!*



JoeHooker said:


> Hi,
> 
> I got in contact with the bank, they wanted my details, a copy of the VRC to prove that the vehicle was transfered to me, now i dont have the VRC since i gave it to the insurance company when they wrote the car off, but they are sending me a copy of it to send to the bank. I think there is an investigation on into the finances owed by the client of the Bank.



I think you've now been told all the bad news you didn't want to hear, but you've said above that you've been in touch with the bank, who are carrying out an investigation into the amount owed, so don't get too stressed just yet! Maybe the bank will see there is no merit in pursuing you for amounts owed by another...how much is owed by the way! Any outstanding amount will probably be enough to stall your insurance claim, but if the amount is relatively small, it should be in everyone's interests to move on. It is possible that the seller is still a customer and in contact with his bank, and may intend to clear his debt! Have you tried contacting the seller?


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## Thrifty1 (6 Dec 2007)

*Re: Bought Car Without Knowing It Was on HP!*



zag said:


> There is a bit of a process gap here, surely.
> 
> If the registration and ownership documents for the car indicate that Joe Customer is the reigstered owner of the car, then why should a potential purchaser need to estabish how the owner funded the purchase ? The official document in front of the potential purchaser clearly states that Joe Customer is the owner of the car.
> 
> ...


 
You are right that should be the case but it isnt. The customer's name is on the registration deeds but the bank actually own the car until the finance is cleared.

Again i agree with Thrifty there should be some way of recording the interest of the bank on these deeds to avoid a situation like this.

At the end of the day the potential purchaser is responsible for running a HPI check but in reality most people may not know to do this or as in the OP case he thought the check his Garda friend did would have uncovered this.


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## aircobra19 (6 Dec 2007)

*Re: Bought Car Without Knowing It Was on HP!*



Thrifty1 said:


> ...Again i agree with Thrifty...



How hard was it to pick a different username LOL.

It would be a good idea to have it on the registration docs for sure.


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## paddyd (6 Dec 2007)

*Re: Bought Car Without Knowing It Was on HP!*

Are the monies owed enough to be stressed over?

i.e. is it a 4 year old Micra, or a 1 year old BMW?


HPI checks are easy to talk about after the fact, but I'm not convinced that many people do them when purchasing


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## jbbcie (6 Dec 2007)

*Re: Bought Car Without Knowing It Was on HP!*



Thrifty said:


> Jbbcie, i know it sounds unfair but the nature of a hire purchase agreement is that the car is not owned by the other person until its fully paid for. Its like a secure loan on the car in a way - so the debt remains with the car. i really think somethink should be introduced where a hire purchase provider is required to have their interest noted on the car documents so that a purchaser can see they have an interest in the car and can resolve this before buying or walk away.



Thrifty, I understand the concept of a purchase agreement.  Fair enough, if the finance is secured on the car, then the car belongs to the finance company until the agreement is paid.  Maybe I'm misinterpreting the OP here.
Okay, so the car is written off, the insurance company try to settle, so  logically the insurance settlement would go to the finance co (assuming this can ever be sorted between the two, god knows insurance companies aren't a favourite of mine).
But are we also saying that any outstanding costs (difference between insurance and money owing on car etc.) is now the responsibility of the buyer?
Any clarification is welcome, I'm confused 
And I completely agree with you, regarding the finance co. having their interest noted on the registration document, as I believe they do in some other countries.
I think legally enforcing the seller to produce a HPI report is definitely worthwhile, it's only €15 after all (maybe additional cost if it had to be posted out), probably less than a decent advert (maybe I'm wrong, haven't sold a car in a while !)
At least that way, if buyers and sellers knew that they had to produce/see this report, neither would have an excuse when the deal was done.  And it saves buyers having to pay a €15 fee for every car they're interested in, which could mount up.

Has a car ever been repossessed where the seller still paid the instalments, but because the seller broke the agreement (and AFAIK the law) by selling the car and not settling, then the finance co. have repossessed the car, because the agreement has been breached?  I'm sure they could do it, although I've never heard of it happening, only when repayments were defaulted.


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## JoeHooker (6 Dec 2007)

*Re: Bought Car Without Knowing It Was on HP!*

Guys, 

Thanks for all your help, i may indeed be getting stressed over nothing, i'am unaware to the amount of finance owned on the car i didn't recieve much information from the lady i was talking to with the bank, she was very harsh with me, well so i thought. We are talking about over €20,000. I know it sounds stupid now but i should have checked the finance of the car but i never thought for a minute there was any problem, i did get it checked with a Garda friend and he said it was as clean as a whistle. 

I have not as yet contacted the seller as i am waiting for the bank to get back to me and fill me in on some of the details. It could be nothing maybe they are short a months or twos payment i don't know. But i don't think the lady from the bank had the right to treat me like the bad guy or criminal. I can't understand however, how this finance can fall into my lap, surely i would have had to change the finance deal over to my name, or my bank account if this was so. I do know if i am lamped with this hefty re-payment i'm up the old brown creek without a paddle, i'm building a house at the moment and i could do without all this hassle.


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## oopsbuddy (6 Dec 2007)

*Re: Bought Car Without Knowing It Was on HP!*



JoeHooker said:


> " i did get it checked with a Garda friend and he said it was as clean as a whistle"
> 
> I don't think a Garda could advise on credit agreement status, only if there were outstanding tickets, or if it had been stolen....but I'm open to correction!
> 
> ...


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## JoeHooker (6 Dec 2007)

The claim with the insurance company is settled, thats been done sometime in october i lost a few thousand on it, but i was happy i got away with what i did, it would have been worse if the misses was injured in any way.


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## some1gr8 (6 Dec 2007)

i am going to buy a car, car has unpaid loan,  and i was told by seller about this, so i made the bank draft paid to the company from he took loan, so its the loan company getting the money for the car not the owner,


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## oopsbuddy (6 Dec 2007)

JoeHooker said:


> The claim with the insurance company is settled, thats been done sometime in october i lost a few thousand on it, but i was happy i got away with what i did, it would have been worse if the misses was injured in any way.



Sorry, I misread your original post - I thought you had settled on the amount of claim and were about to get paid, until this issue cropped up, and glad too that there were no injuries! Still, back to the other points, can your insurance company tell you how much was owed, if you can't get any civil response from the bank, just for info purposes, and I would recommend making every effort to contact the seller. If you can, and he/she is willing to help sort it out, that should be some reassurance I hope! Best of luck.


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## Thrifty1 (6 Dec 2007)

I would contact the seller directly there may be an innocent explaination. I dealt with a lady recently who sold her car through our garage. She signed a form stating there was no outstanding HP on it.
A few days later we discovered there was. I contacted her and she had in error thought the loan was a personal loan and therefore not attached to the car but it was a HP agreement. She cleared the finance that day.

I deal with people on a daily basis who genuinely do not realise they can sell their car without clearing the finance. They think if they want to burden themselves with a second car loan or continue paying for a car they no longer own, they can.
I hope this gets sorted for you soon.


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## jbbcie (6 Dec 2007)

Well, this has taught me to steer clear of HP anyways.  Seems like a minefield.
Maybe I have a very simplistic view of how this should work, but I'd have thought the money from the insurance co. would have gone to the finance co. and whatever is outstanding the finance co. can chase the seller for (who signed the agreement).
Is that what happened?  Did the insurance co. hand the money to the finance co?
It's bad enough that you got caught with a car that may never be yours, so wouldn't it be a step too far to expect you to cover the remaining costs?


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## JoeHooker (7 Dec 2007)

the insurance company gave the money to me months ago, i have recently cashed the cheque, or put it in my account. This was around the beginning of October, it's only now that the insurance company rang me, they are trying to clear the claim, they said to me that i have outstanding finance on the car, i thought they had got the wrong person. They rang the bank but they wouldn't tell him anything but the car still had finance remaining on it but was registered for a different name, the original owner. 

I rang them then got sent around on 3 different people having to tell each my storey, then to get treated like a criminal myself by some snotty lady, all i wanted to know was the situation of the case but she wouldn't even tell me that obviously if they reckon i am due to take over the finance for the car that they would have told me the finance owed and be a bit more friendly. 

However i would have thought to hand over finance like that to somebody a legal document would have had to be signed by me, stating that i am willing to take over the remainder of the monies owed. 

I think i'll leave it to the bank to investigate, i'm not going to get cut up about it any longer. I'm sure they have the address of the previous owner, let them pay them a visit.


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## Thrifty (7 Dec 2007)

In relation to a hire purchase car involved in an accident i'm not 100% sure but i think the owner has to report the matter to the hire purchase company, pay over the insurance proceeds and they may get a bit of an interest rebate on the lump sum from the insurance but i think they still owe the balance on the agreement. It's very important therefore that the owner of a hirepurchase car has comprehsive insurance otherwise they can be left with a very big bill still to pay off and no car (rather like a car loan) Failure to report an accident is a breach of the Hp agreement.


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## jbbcie (7 Dec 2007)

Thrifty said:


> In relation to a hire purchase car involved in an accident i'm not 100% sure but i think the owner has to report the matter to the hire purchase company, pay over the insurance proceeds and they may get a bit of an interest rebate on the lump sum from the insurance but i think they still owe the balance on the agreement. It's very important therefore that the owner of a hirepurchase car has comprehsive insurance otherwise they can be left with a very big bill still to pay off and no car (rather like a car loan) Failure to report an accident is a breach of the Hp agreement.



Hi Thrifty.  Yes, that was my understanding also, it makes sense as the car is the property of the finance co. so they'd have to be informed of any insurance claim on the car.
My concern was that it sounded as though the finance co. were pursuing JoeHooker for any outstanding money between the current finance balance and what the insurance co. paid.  They should surely chase the seller for this.  I'm sure the finance co. are mighty p****d over this, but it's hardly JoeHookers fault.


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## Thrifty (7 Dec 2007)

Hi don't really understand what you're asking. If the car was subject to a HP agreement then its up to the HP company how they decide to pursue it but technically the new owner takes on the car with the burden of the HP agreement. I don't honestly know what happens if new owner then has an accident in it - but would imagine he should inform the HP company if he has since become aware of the HP agreement. As said very much up to HP company how they decide to deal with. New owners only course of action if they pursue him is for him to then take legal actions against person who sold him the car. Unfair but thats it.


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## jbbcie (7 Dec 2007)

That's the bit I don't understand.  How can the new owner take on the burden of a HP agreement that they never signed.   Is it even possible to be made liable for a HP agreement that you personally never agreed to?
Surely for that to happen both parties would at least have needed to inform the finance co. that the car was being passed on to a new owner.  It surely would have required signatures from old and new owner.  I'm sure that doesn't happen, the HP gets settled before the car can change hands.
From what I've read in this topic, if I bought a car and found out that it had outstanding HP, the best thing I could do would be sell it on to the next unsuspecting person, get my name off the VRC and say nothing.


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## ang1170 (7 Dec 2007)

jbbcie said:


> That's the bit I don't understand. How can the new owner take on the burden of a HP agreement that they never signed. Is it even possible to be made liable for a HP agreement that you personally never agreed to?


 
It comes down to your assumption that you are the "new owner": there's quite a difference between buying something from someone who owns it, and paying cash to someone who says they own it.

The registration documentation is NOT proof of ownership.


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## zag (14 Dec 2007)

ang1170 - this is the confusing bit.  What *is* proof of ownership ?

z


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## Phibbleberry (30 Jul 2008)

Hey Guys...

Bringing this one back up with a question:

Looking at a car in a well established used car dealers on the Naas road (tomorrow, hopefully!) - Did a Motorcheck on it, and it said there was HP still outstanding on it - rang the garage, they said yeah, there was 5.5k but that cheque had been sent and they have proof of receipt of same...

Question is, if they can satisfy me that any outstanding HP balance has been paid, is it safe enough to buy - this whole 'buyer beware' thing is freaking me out a bit!!

We have finance in place and insurance ready to go, and really like the car....would you!?

Cheers...
PB


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## mathepac (30 Jul 2008)

Phibbleberry said:


> ... Did a Motorcheck on it, and it said there was HP still outstanding on it - rang the garage, they said yeah, there was 5.5k but that cheque had been sent and they have proof of receipt of same...
> 
> Question is, if they can satisfy me that any outstanding HP balance has been paid, is it safe enough to buy - this whole 'buyer beware' thing is freaking me out a bit!! ...


You need confirmation in writing addressed to you from the finance company that the finance is cleared, and that the sale by the dealer is authorised, otherwise the car is not the dealer's property to sell. (They may want your money to clear the existing loan, despite what they told you).

Under the HP agreement, until all loans are cleared, title to the car remains with the HP company.

I'm sure dealerships take in cars as trade-ins all the time with finance outstanding, but in the current climate there is a mounting level of repossessions and loan defaults (I have a pals who work in various sides of the business - car-sales, loans and repossessions)


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## aircobra19 (30 Jul 2008)

There should be no problem waiting for the HP to clear if the cheques gone.


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## RS2K (30 Jul 2008)

aircobra19 said:


> There should be no problem waiting for the HP to clear if the cheques gone.



Unless it's made of rubber. Boing!


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## RS2K (30 Jul 2008)

Hey OP what happened to your original issue btw?


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## aircobra19 (30 Jul 2008)

RS2K said:


> Unless it's made of rubber. Boing!


 
Thats why you wait...


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## Phibbleberry (31 Jul 2008)

Ok, so I've been faxed the Banks reciept of cheque...it hasn't cleared yet, but they've recieved it...The fax is clearly a legit one from bank to dealer, detailing the previous HP owners name/ref no. etc...
The dealers been around about 8 years, has two dealerships etc...its a fairly safe bet they won't cancel the cheque, right!? 

Cheers, 
PB


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## Pique318 (31 Jul 2008)

zag said:


> ang1170 - this is the confusing bit.  What *is* proof of ownership ?
> 
> z




I'd like an answer to this too...

If the registration document isn't a proof of ownership, then what is its purpose ? The car is registered to Joe Bloggs but John Doe actually owns it, what proof does John Doe have of ownership ?


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## mathepac (31 Jul 2008)

Phibbleberry said:


> Ok, so I've been faxed the Banks reciept of cheque...it hasn't cleared yet, but they've recieved it...The fax is clearly a legit one from bank to dealer, detailing the previous HP owners name/ref no. etc...
> The dealers been around about 8 years, has two dealerships etc...its a fairly safe bet they won't cancel the cheque, right!?
> 
> Cheers,
> PB


If you say so. You seem to want to buy the car so go ahead.


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## emerald lass (1 Aug 2008)

Why not ask the garage if you can give a deposit which will be refundable in the instance that the cheque does not clear. That way you can secure the car will not be sold to someone else, but should the cheque to the HP co not clear or there be any problems you can get your money back. If they agree get it in writing that the deposit is fully refundable.


> The fax is clearly a legit one from bank to dealer, detailing the previous HP owners name/ref no. etc...
> The dealers been around about 8 years, has two dealerships etc...its a fairly safe bet they won't cancel the cheque, right!?


the dealer may have been around 8 years, but I thought the cheque was from the orig buyer to clear HP????? If I were you I would wait til cheque clears and get it in writing that all HP is cleared before you complete the sale.


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## aircobra19 (1 Aug 2008)

Phibbleberry said:


> Ok, so I've been faxed the Banks reciept of cheque...it hasn't cleared yet, but they've recieved it...The fax is clearly a legit one from bank to dealer, detailing the previous HP owners name/ref no. etc...
> The dealers been around about 8 years, has two dealerships etc...its a fairly safe bet they won't cancel the cheque, right!?
> 
> Cheers,
> PB


 
Whats the rush?


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## Phibbleberry (7 Aug 2008)

Hey, 

Went ahead....it was a great deal, and I didn't want to lose it - wouldn't've got nearly as good a car for the same money had I have waited...

Called motorcheck and they confirmed the cheque has cleared which is great news - I had started to worry about my impulse buy!

Thanks for all the advise..
PB


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## Brendan Burgess (21 Jun 2009)

admin bump


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