Understanding HPI Finance Agreements

An HPI (Hire Purchase Investigation) check is a crucial step when buying a used vehicle, especially if you’re considering financing it. It reveals the vehicle’s history, including whether it’s subject to an outstanding finance agreement.

What is a Finance Agreement?

A finance agreement, most commonly a Hire Purchase (HP) agreement, means the finance company legally owns the vehicle until the borrower makes all the agreed-upon payments. Until then, the borrower is essentially “hiring” the vehicle. Other forms of finance agreements include Personal Contract Purchase (PCP) and Conditional Sale.

Why is an HPI Check Important?

If a vehicle is subject to outstanding finance and you unknowingly purchase it, the finance company retains the legal right to repossess it, even if you’ve already paid for it. This can leave you out of pocket for the purchase price and without a vehicle. An HPI check uncovers whether this risk exists.

HPI Checks and Finance Agreements

The HPI check database contains information from finance companies about vehicles that have outstanding finance. A thorough HPI check will verify:

• Whether the vehicle is currently subject to a finance agreement.
• The name of the finance company holding the agreement.
• If the vehicle has ever been written off (totaled) by an insurance company.
• If the vehicle has been stolen.
• Whether the vehicle has a mileage discrepancy.
• Whether the vehicle has been scrapped.
• If the vehicle has been imported or exported.

What Happens if a Vehicle Has Outstanding Finance?

If the HPI check reveals outstanding finance, you have a few options:

1. Negotiate with the seller: The seller is responsible for settling the finance agreement before selling the vehicle. You can negotiate a lower purchase price that allows them to pay off the outstanding amount.
2. Request the seller to settle the finance: Insist that the seller provide proof that the finance agreement has been settled *before* you hand over any money. Get written confirmation from the finance company confirming the settlement.
3. Walk away: If the seller is unwilling or unable to settle the finance, it’s best to walk away from the deal to avoid the risk of repossession.

Getting an HPI Check

Several companies offer HPI checks. Ensure you choose a reputable provider. You’ll typically need the vehicle’s registration number (number plate) and Vehicle Identification Number (VIN). The cost of an HPI check is relatively low compared to the potential financial loss of buying a vehicle with outstanding finance.

In Conclusion

Always conduct a thorough HPI check before buying a used vehicle, especially if you’re not paying with cash. Understanding the implications of outstanding finance and acting accordingly can save you significant financial hardship and ensure a smooth and secure purchase.