Protecting Yourself When Buying Used Cars

Michael bought a used car from a private seller, David, without doing a PPSR search. Months later, his car was repossessed by First National Finance

·3 min read
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PPSR Searches: Protecting Yourself When Buying Used Cars

The Personal Property Securities Register (PPSR) is a national online database that records financial interests in personal property, including cars. Before buying a used car, especially from a private seller, a PPSR search is a vital step in protecting yourself.

Why is a PPSR Search Important?

A PPSR used car search reveals key information about the vehicle's financial status, helping you avoid potential problems:

  • Repossession Risk: The search shows if there are any outstanding loans or finance agreements against the car. This means the vehicle could be repossessed, even if you've paid for it.
  • Written-Off or Stolen: The search can tell you if the car has been declared a write-off or reported stolen.
  • Takata Airbag Recall: It shows if the car is on the Takata airbag recall list, indicating potentially dangerous airbags.

A Real-Life Example: Michael's Story

Michael bought a used car from a private seller, David, without doing a PPSR search. Months later, his car was repossessed by First National Finance. David had taken out a loan to buy the car but stopped making payments after selling it to Michael. The lender had a registered security interest on the car, which meant they could repossess it.

Understanding Secured and Unsecured Loans

  • Secured Loans: Secured loans are backed by collateral, which means the lender has a right to seize and sell the collateral if the borrower defaults on the loan. In the case of a car loan, the car itself is typically the collateral. If the borrower fails to make payments, the lender can repossess the car.
  • Unsecured Loans: Unsecured loans are not backed by any collateral. The lender relies on the borrower's creditworthiness and promises to repay the loan. If the borrower defaults on an unsecured loan, the lender can't seize any property to recover their money. They can, however, take legal action to recover the debt.

In Michael's case:

David had taken out a secured loan to buy the car, with the car itself serving as collateral. This meant that First National Finance had a security interest in the car. When David defaulted on the loan, they were legally entitled to repossess the car. The PPSR is the government database that stores security interests in assets, like motorvehicle, boats, aircraft etc.

How to Avoid Michael's Situation

Do a PPSR Search: Before buying a car, especially from a private seller, always conduct a PPSR search. This will show any existing financial interests against the vehicle.

Check Twice: Perform the search again on the day you're buying the car to ensure nothing has changed since your initial check.

Important Notes:

  • Seller's Disclosure: The seller is not obligated to inform you about any financial interests on the car. It's your responsibility to do your own research.
  • Dealership Purchases: While you are protected when buying from a licensed used car dealer, it's still a good idea to request a PPSR search certificate from them. You can also conduct your own search.

Common Questions:

  • "But I paid for it, isn't it my car?" Not necessarily. If a finance company has a registered interest in the car, they can still repossess it, even after you become the owner.
  • "What if the seller shows me proof they paid off the loan?" It's not enough to rely on a bank statement. The finance company needs to remove their registration from the PPSR.

A PPSR search is a simple, inexpensive way to protect yourself when buying a used car. It takes just minutes to complete your PPSR Search today.

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