My car is on finance or hire purchase

The most common enquiry that we receive via our helpline or enquiry form is that ‘my car is on finance or hire purchase and has been clamped’. Although the regulations expressly provide that a bailiff may only take control of goods belonging to the debtor, this does not automatically mean that a car that is on finance cannot be taken into control. The deciding factor will be the type of finance agreement and the amount of equity/ beneficial interest that may remain in the vehicle if it were sold and  remaining finance paid off. Please see our separate heading below on Hire Purchase.

The different types of finance agreements

According to figures from the Finance & Leasing Association, around 75% of all new cars are now bought on credit. There are many different types of ‘finance’ or other ‘agreements’ and below, we address  the most popular types:

Motability Finance

A Motability vehicle belongs to Motability Finance and accordingly, cannot be seized by a bailiff. Of significance, is that a vehicle displaying a valid ‘Blue Badge’ will be considered exempt from seizure. This requirement is outlined under Regulation 4  of the Taking Control of Goods Regulations 2013.

Log-Book Loans

Although enforcement companies have access to DVLA records, such a search will not reveal the existence of a ‘Log Book’ loan.  It is usual for enforcement companies to will carry out an  ‘HPI’ search in advance of a visit. This is to establish whether or not the vehicle is subject to finance. An HPI search should reveal the existence of a ‘Log Book’ loan. However, it will not reveal how much is outstanding under the agreement.

If the amount outstanding exceeds the value of the car, it would not be seized. If you have a Log Book loan against your vehicle, you will need to provide evidence to the enforcement company.

Hire Purchase

The legal position regarding the clamping of a Hire Purchase vehicle by an enforcement agent was clarified in June 2024 when the Court of Appeal ruled in the case of Burton v Ministry of Justice that clamping a vehicle subject to Hire Purchase was a breach of the Tribunals, Courts & Enforcement Act 2007.

From enquiries that we receive, many people confuse  ‘hire purchase’, with a Personal Contract Plan (PCP). It is vitally important to check your agreement

Personal Contract Plan (PCP)

Under a Personal Contract Plan (PCP)  you can acquire a brand new car with a five year warranty at a low interest rate. Depending on your credit score, a nominal deposit is required. In order to own the vehicle, a  final  ‘bullet’ payment would need to be paid at the end of the term. In reality, most people choose not to pay the ‘final sum’. Instead they trade-in the car and acquire a brand new vehicle under a new Personal Contract Plan.

Until the final payment is made under the Personal Contract Plan, the vehicle will continue to be owned by the finance company.

Can a bailiff clamp a car that is on finance or hire purchase?

As outlined above, a vehicle subject to Hire Purchase cannot be clamped. However, if a vehicle subject to finance, and is located on a highway, then under  Regulation 18.2 of the Taking Control of Goods Regulations 2013 it states that if the vehicle is located on a highway, it must (not may), be immobilised.

How long can the vehicle be clamped for?

A vehicle that is immobilised cannot be removed to the vehicle pound unless a period of not less than 2 hours have elapsed. The relevant legislation is Regulation 18.5 of the Taking Control of Goods Regulations 2013. Legislation does not provide a maximum period that a vehicle can be immobilised for. If the vehicle is subject to finance, it is fairly common for it to be immobilised for a period of up to 2-3 days. This period of time is to give the enforcement agent the opportunity of making enquiries with the finance company. Unfortunately, we have received many reports of finance companies instructing the enforcement agent to remove the vehicle to their pound. This is usually because of arrears under the agreement.

What will the finance company do if the vehicle is clamped?

It is not usual for the finance companies to intervene. This is because, almost all finance agreements contain a  clause warning that if a fine or penalty is not paid and the vehicle is subsequently seized, that this will lead to the agreement defaulting.  In order to protect their vehicle, some companies issue a Default Notice.

Commentary from Bailiff Advice Online

If your vehicle has been clamped or removed or your vehicle is subject to finance or hire purchase, you  can email a question to us using our online Enquiry Form. Alternatively, we can be contacted by phone. Details are on our Contact page