A young couple recently saw a car on Trade Me.  They contacted the seller, met with him, gave him $12,000 cash, and drove home with their car.

The couple received a nasty shock about three months later when they received a letter from a finance company saying that the car was security for an $8,000 loan.  The letter said that if the loan was not repaid, the car would be re-possessed by the finance company.

It appears that the previous owner had borrowed $8,000 against the car and did not tell the young couple.  Furthermore, the couple did not check whether there was any money owing on the car before buying it.  To make matters worse, the previous owner was not contactable and seems to have left the country.

Unfortunately, there was not much the couple could do: they either had to pay the finance company $8,000, or the car would be re-possessed.

This shows how important it is to carry out the proper checks before buying.  It is particularly important to check that money is not owed on a car in a private sale. It is very simple and cheap to do this check, and failing to do so may mean you could lose thousands of dollars.  The Personal Property Security Register’s website has step-by-step instructions on how to carry out the check at https://ppsr.companiesoffice.govt.nz/

If you would like any advice on this issue or have any queries on your legal rights, then feel free to call us on (04) 473 6850.