Yes, a car on finance can still be impounded. Whether the vehicle is on hire purchase, personal contract purchase (PCP), or another finance plan, police have the legal power to seize it if it’s found being driven without valid insurance, tax, or licence entitlement. What matters at the roadside is not who owns the vehicle but whether it’s being used lawfully.

Why finance doesn’t prevent seizure

When a car is on finance, legal ownership usually belongs to the finance company until the agreement is fully paid off. The registered keeper — the person listed on the V5C logbook — is responsible for day-to-day use, tax, and insurance. If the police find the car being driven illegally, they can seize it under Section 165A of the Road Traffic Act, even though a finance firm technically owns it.

The same applies to leased and contract-hire vehicles. The law gives officers the power to remove the vehicle first and sort out ownership questions later. The finance company can be notified afterwards, but the seizure itself is lawful.

Who can collect the car

Usually the registered keeper or someone acting on their behalf collects the car, provided they bring:

• photo ID and proof of address,
• the V5C logbook or a letter of authority from the finance company,
• valid insurance that covers impound release, and
• payment for removal and storage fees.

If the vehicle is still under a finance agreement, the pound may also ask for confirmation that the finance company consents to its release. Without that written consent, some compounds may refuse to hand the car over, especially if there’s any doubt about ownership.

What if the finance company refuses consent

In some cases, the finance provider might decide not to authorise release — for example, if the account is in arrears, or the car was being misused. The pound can then release the vehicle only to the finance company’s appointed agent. If the agreement is terminated, the vehicle may be collected and repossessed by them instead of returned to the driver.

If that happens, the borrower should contact the lender directly. It may still be possible to settle the outstanding balance or recover the vehicle once arrears and impound charges are paid.

Insurance and liability

Even though the car is financed, the responsibility for insuring it always lies with the keeper or main driver. If the vehicle was seized for being uninsured, the finance company isn’t liable for the offence — but they may still face the risk of their asset being sold or scrapped if it isn’t collected in time. That’s why lenders often act quickly once notified of an impound.

When the car isn’t recovered

If no one collects the car within the statutory period (usually seven working days from the notice date), it may be sold or scrapped. The proceeds rarely cover the full finance balance, meaning the borrower remains liable for what’s left. Letting the vehicle be destroyed without informing the lender can cause serious financial and credit-rating damage.

Final note

A financed car can absolutely be impounded if it’s used illegally or left untaxed or uninsured. Legal ownership by a lender doesn’t protect it from seizure. To recover the car, you’ll need both the lender’s consent and valid impound insurance in the name of the person collecting it. Contact the finance company immediately after a seizure — it’s the fastest way to prevent extra costs, damage to your credit record, or permanent loss of the vehicle.

Check here for more useful information about impounded cars!

Please note: impound rules, collection windows and fee structures are set locally and can change at any time. Details on this site offer a broad outline only and are not guaranteed to match the requirements of any individual pound or authority.