A new report has revealed that several Peugeot drivers were shocked to find out the former owner of their vehicle was a rental company.

Some paid thousands of pounds over the odds after being informed that their car had a previous over, when in fact it was rented to many drivers.

Two British car hire giants have used a “front” and an abbreviated company name in order to disguise the previous owner on the registration documents.

Some customers were told that their vehicles were “fleet” vehicles or owned by manufacturers to later discover that their purchased car was one of over 400,000 ex-rentals sold each year.

An investigation is underway by the Office of Fair Trading into the £35 billion used car market, focussing on dealerships, and is preparing to publish new guidelines on when firms should be reprimanded for misleading buyers.

Experts have warned customers to maintain the attitude of ‘buyers beware’ and demand to know the previous history of the car prior to handing over the money.

One of the most controversial cases involved cars previously leased out by National Car Rental, owned by Europcar, Britain’s largest car hire company which has a fleet of 54,000.

The vehicle registration documents revealed that the name of the previous owner was Provincial Securities Ltd, which did no business.

One car buyer who unknowingly purchased a used rental car from an official dealership said that if he had known about the cars history, he would have been dubious about buying it, given the abuse rental cars get from their drivers.

A Liberal Democrat transport spokesman has described the business as shady and an attempted to get higher prices out of vehicles that have been driven by many people.  He believes that ex-rental cars should be clearly labelled.

On the other hand, he said that the replacement of the 1968 Trade Description Act by new consumer rules last year had caused confusion and needed to be clarified by the office of fair trading.