Before purchasing a vehicle, we recommend that you check the Personal Property Security Register (PPSR). The PPSR is an online database that records if your potential vehicle has been used as security for a loan, written off in an insurance claim, or reported as stolen.
PPSR: Case Study
A client purchased a second hand motor vehicle for $15,000 in 2014 through a private sale. Recently, the client attempted to sell his car. The new buyer searched the PPSR and found an encumbrance listed on the vehicle by a bank. As a result, the new buyer declined to buy the car. The bank informed the client that the car was secured to a loan that has not been settled by the previous owner.
The client called CCLSWA seeking advice on how to remove the encumbrance and whether he would be liable for the unsettled loan.
CCLSWA advised the client that it was his responsibility to check for encumbrances by conducting a search on the PPSR register at www.ppsr.gov.au
. When the bank has a security over a car, the security moves along with it, entitling the bank to repossess the car if the loan remains unpaid. However, as the client did not take out the car loan he would not be liable for repaying the loan amount or any shortfall if the bank chose to repossess and sell the car to settle the debt.
The client was advised that in order to remove the encumbrance from the motor vehicle, the loan must be repaid.
Our latest infographic has more information on purchasing cars.