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We cannot investigate because it is not your loan

Tim purchased a car from a private seller for $6,000. The sale and purchase seemed to go smoothly, and, for a while, Tim enjoyed driving his new car. However, a couple of months later a repossession agent came to collect Tim’s car. Tim was confused because, as far as he knew, his car belonged to him.

The repossession agent explained that someone (the seller) owed the lender money, and the car secured that loan. The seller had stopped repaying the loan and the lender had the legal right to take the car.

Tim contacted the lender to talk about how he could get his car back, but the lender said they were unable to discuss the loan to release the security over the car, because Tim was not the borrower.

Both the lender and Tim tried to contact the seller again, but they discovered the seller had moved to another country. They did not receive any response.

Tim complained to FSCL that the lender would not give his car back. 



Tim felt it was unfair that he was left without a car he had paid for and said the seller had not mentioned anything about a loan owing to a lender.

Tim did not hear anything from the lender until the repossession agent was on his doorstep. Tim felt the lender should have been chasing the seller for the loan balance, rather than taking away the car he had paid for.

The lender said they were following their standard process. They had not received payments or contact from the borrower, so they had a right to collect the car, which was the registered security for the loan.

The lender said they would be happy to talk to Tim about a lump sum payment to release the security, or look at transferring the loan into his name, but they would need authority from the seller to do so.

As the seller could not be contacted, this was not an option. In any event, Tim felt that would not resolve his complaint because he should not have to pay the seller’s debt when he had already paid the seller $6,000 when he bought the car.



As the lender could not offer Tim a satisfactory resolution, we considered whether we could investigate Tim’s complaint.

For FSCL to investigate a complaint, it must be made by, or on behalf of, someone who has received a financial service from the company or individual being complained about. As Tim was not the borrower, he had not received a financial service from the lender.

Unfortunately, this meant Tim’s complaint fell outside our rules to investigate.



Although Tim was unaware of the loan when he purchased the car, we explained that the seller had previously given the car as security for a loan. The lender had then registered their right over it on the Personal Property Securities Register (PPSR). If the borrower, the seller of the car, did not repay the loan, the lender was entitled to repossess the car to repay the debt owed.

We explained to Tim that the lender did not do anything wrong by repossessing the car because they had a right to the car and to recover the debt.

As the lender was subject to privacy laws, they could not disclose to Tim any information about the loan because that information was about the seller.

It is unfortunate that Tim did not check the PPSR, before paying for the car. If Tim had checked the PPSR, he would have discovered the car secured money owed by the seller. Tim could then have insisted that the seller repay the debt to the lender so that the lender could release the security over the car.


Insights for consumers

Our complaints process can help to resolve complaints between a consumer and a lender, about a financial service that the lender is providing to a consumer. However, we cannot help with disputes between a consumer and a third-party.

The situation in Tim’s case could easily have been avoided if Tim had done a search for the vehicle on the PPSR. The PPSR will tell you if there is money owing on the vehicle. We attach a link to the PPSR website here.


About the PPSR

The PPSR is an official government register of security interests over personal property. A lender can record their legal interest in personal property that has been used to secure a debt on the PPSR.

You can check the PPSR to see whether there are any debts or obligations attached to goods you want to buy and to make sure that someone else does not have an overriding legal right to the goods.

When someone purchases a vehicle on finance from a lender, the lender will register their legal claim to the vehicle on the PPSR. This means the vehicle is ‘security’ for the loan and the lender is a ‘secured party’ who has a legal interest in the vehicle. If the borrower does not pay back the money they borrowed, the lender will repossess and sell the car to recover the money they are owed. The registered legal claim means that the lender can repossess the vehicle, even if it has changed hands and has a new owner.

In an ideal world, a private seller would tell you that the vehicle they are selling secures debt owed to a lender. The private seller would use your money to repay that debt and the lender would remove their security interest over the vehicle on the PPSR.  

However, when you buy from a private seller, the risk is that the seller may not tell you. Lenders are not responsible for ensuring that their borrowers do not sell a secured vehicle without telling the buyer of the lender’s interest.

To protect yourself against the risk of losing your money and your vehicle you should always check the PPSR before you buy a vehicle from a private seller.

If someone has sold you a vehicle with a registered security interest attached to it, you may want to contact the private seller about repaying their debt. If the seller does not repay the money you could seek legal advice, perhaps from a community law centre, and take the matter to the Disputes Tribunal.