How to check if a car has finance owing

When a car is bought on a secured loan, the lender registers a security interest against its VIN on the PPSR. The interest stays until the loan is paid out and the lender removes it. Selling the car does not remove it.

If you buy a car with an undischarged interest, the lender can repossess it from you. You would then have to pursue the seller for your money. The car check is cheap; the alternative is not.

Finance owing is not a rare edge case in the private market. A 2016 Equifax analysis of CarHistory reports from 2015 found 12.8 per cent of cars put on the market carried an encumbrance. The figure is dated, but it is the only published one.

The PPSR searches by VIN, chassis number or manufacturer's number. It does not accept a number plate. So the first job is to get the 17-character VIN.

The seller can read it from the registration papers or the compliance plate. If you are looking at an online ad with only a plate, the free Victorian rego check prints the full VIN for Victorian cars. Queensland usually does too. New South Wales and South Australia show the last four characters only, and Western Australia now masks part of it.

For other states, or if the seller is slow to respond, a plate-based check service does the conversion. It looks the plate up in vehicle data, finds the VIN and then runs the PPSR search.

1. Get the VIN. Photograph the compliance plate or the base of the windscreen, and ask the seller for a photo of the rego papers. Make sure the two match.
2. Go to ppsr.gov.au, choose the motor vehicle search, enter the VIN and pay $2.00 by card. Or enter the plate and state into a plate-based check and let it find the VIN.
3. Read the "PPSR registration details" section of the certificate. "No registrations found" means no finance is recorded. One or more registrations means a secured party has a claim.
4. If a secured party is listed, ask the seller for a payout letter from that lender showing the balance and the account number.
5. Pay the lender directly for the payout amount and the seller for the remainder, or settle through the lender on the day. Do not hand the full price to the seller on a promise.
6. Search again on the day you pay. A security interest can be registered at any time, and a certificate dated the day of purchase is the one that counts.

A clean certificate says there is no security interest or other registration kind registered against the serial number. That line, plus the search number, is what you keep.

A certificate with a registration shows the PPSR registration number, the start date, the collateral class (usually "Motor vehicle") and the secured party. The secured party is usually a bank, a finance company or a dealer group, with an address for service.

The certificate never shows the balance. It also does not show the borrower's name, because grantor details are withheld for consumer property. A listing could be a loan the seller is still paying, or a loan that was paid out and never discharged. You find out by asking.

A registered interest is not the end of the deal. Most cars sold privately with finance are sold by people who intend to pay the loan out from the sale price. The risk is in how the money moves, not in the listing itself.

Ask for a payout letter from the lender, dated within the last few days. Pay the lender its figure directly, by transfer to the account on the letter, and pay the seller the difference. Get the lender's confirmation that the account is closed. The lender then removes the registration, usually within days.

If the seller says the loan was paid off years ago but the registration is still there, the seller needs to contact the lender and have it discharged. You can also ask for proof of the payout. Do not pay until the register is clear or the payment is going to the lender.

The $2 search at ppsr.gov.au is the cheapest complete option, and it is the one every paid service relies on. Budget Direct offers the same certificate free, limited to two per mobile number, in return for marketing consent.

The free state rego checks do not show finance. They show registration status, expiry and a few vehicle details. South Australia's check adds a general warning if the car is recorded as stolen or written off, but none of them touch the PPSR.

Licensed dealers are required to clear finance before a car is sold, so a dealer purchase carries less of this risk. Private sales, online marketplaces and auctions are where undisclosed finance turns up. If you are buying privately, treat the PPSR search as part of the handover.

Our car finance check runs the PPSR search by rego or VIN from $12.95. On the report tier it re-runs the finance check free for 14 days, so you can confirm the register is still clear when you pay.

Check a car for finance owing