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I had an agreement with the finance company to pay a small amount every month until the outstanding balance was settled, the car was then sent to auction and the amount it was sold for was deducted from the amount i owed. as it was a secured loan on the vehicle do i still have to (by law) pay the outstanding balance ?

Auto finance is what i do for a living and the answer to your question is yes you still owe the remaining balance.be careful, if you do not pay the lender they can take you to court and get a judgment at that point they can attach bank accounts, garnish wages (if your state allows it) and file liens on any other property you may own like cars, boats, land and homes.if it goes this far, the judgment will show on your credit on top of the repossession for the next 7-years making it almost impossible for you to get any other type of loans without making large down payments, fees and state maximum interest rates.