Buying a car with outstanding finance

GeraintUk · Post by **GeraintUk** » Mon Mar 05, 2007 11:50 pm

Anyone know the deal with this ?

I'm looking to buy a car, and I think it has outstanding finance on it that the owner wishes to pay off once he's got monies in from sale.

I've not done Hpi on car yet, as i'm not yet in a position to confirm my interest to buy it (waiting for the ZT to sell, which looks as if happening within next week now, with several offers including traders).

I understand if i'm right that even if I buy the car, the finance owing on it becomes the new owners legal problem ? i.e it's still officially owned by finance company.

how do you proceed with this ?
All well and good getting them to say they will pay finance off, but what if they don't ?

cheers
g

Squaddiemodo · Post by **Squaddiemodo** » Tue Mar 06, 2007 12:05 am

as a private sale, dont touch with a barge pole, if it is from a dealer then it is thier problem not yours.

if you buy privatly, he can just stop paying/not pay, and you COULD (not deffo) be lumbererd with the outstanding.

mach1rob · Post by **mach1rob** » Tue Mar 06, 2007 12:05 am

Basically dont buy it until you have a letter from said finance company saying they relinquish all title to said vehicle.
If you pay matey, and then he decides nah I'll spend this money on something else and not pay off the finance, the company is perfectly entitled to come and remove the car as it's still theirs.
If you're dead set on it, you could possibly pay the finance company direct, that way you know they've had cash, and you can ask for a copy of letter relinquishing title.

GeraintUk · Post by **GeraintUk** » Tue Mar 06, 2007 12:13 am

it is a private sale.
the guy is on many of the mg forums and seems very amicable, and open about finance owing.

The amount of the sale of car isn't as much as the outstanding finance iirc, so even if i paid finance company directly, there would still be monies owing.

This can't be that uncommon a problem though, so did wonder if there was a "correct" way of proceeding.

Certainly something for me to think about i guess. Might have to see about me making my payment to finance company and he doing the remainder in same phonecall or something.
Car is perfect for me as to what it is, and the cost of it

mach1rob · Post by **mach1rob** » Tue Mar 06, 2007 12:19 am

You can pay off finance outstanding at anytime, you just need a settlement figure from them, as it's not necessarily the same as the outstanding payments, all down to interest etc and if they add a fee for terminating agreement early, however if over 50% of finance has been paid it's not normally a biggy. TBH they wont be bothered where or who payment comes from, but as long as you get a letter saying they no longer have an interest in the vehicle, then you wont get a problem in the future. If seller is that amicable, then perhaps you can work something out between you for him to pay the extra off.

GeraintUk · Post by **GeraintUk** » Tue Mar 06, 2007 12:22 am

yep, know what you are saying.
can also see it from seller's perspective.
he needs the money to pay off the finance, so can't do it before someone agrees to buy it etc. catch 22, especially as car is other end of country, not like i can wait for a letter whilst i'm down there, but also wouldn't buy it without seeing it first.

see what happens.
all academic until the ZT goes, but with the interest i've had, including SMC wanting to offer me my asking price, it's pretty much deffo going to go

cheers
g

mach1rob · Post by **mach1rob** » Tue Mar 06, 2007 12:36 am

If you think you can trust the seller to actually pay finance company after you've paid for and taken on the car fine, but it's a risk, up to you whether you want to take it, the other possibility is to send a cheque to seller made out to finance company, and ring them to find out if its been paid off, or if they still have an interest in the car.

dreaddan · Post by **dreaddan** » Tue Mar 06, 2007 1:00 am

GeraintUk wrote:iThis can't be that uncommon a problem though, so did wonder if there was a "correct" way of proceeding.

It's called running away!
The only way I would touch it would be to get him to pay off the finance company minus your payment and then you pay the finance company direct.
After checking how mutch is left to pay.

OAPWITHATTITUDE · Post by **OAPWITHATTITUDE** » Tue Mar 06, 2007 1:11 am

Excuse me butting in but the guy wants to sell you a car for less than he owes on it

. I suggest he gives you the car and whatever is going to be outstanding and you pay the whole amount to the finance company

:

GeraintUk · Post by **GeraintUk** » Tue Mar 06, 2007 1:54 am

OAPWITHATTITUDE wrote:Excuse me butting in but the guy wants to sell you a car for less than he owes on it . I suggest he gives you the car and whatever is going to be outstanding and you pay the whole amount to the finance company :

often the case for those who bought MG's brand new.
Look at the ZT260,,,,was Â£34k new....2 years later they are 17k becuase of MG's demise.

A lot of owners are in negative equity.

Good idea on transferring policy plus difference to me though and then i can pay finance company directly.
See what the score is when i'm ready to make a formal offer on the car etc.

cheers
g

hoody · Post by **hoody** » Tue Mar 06, 2007 8:05 am

a lot of these companies have offices dotted around the country as they are normally an affiliate of one bank or another,in the past i have went to the office and payed off the outstanding balance to them on the spot,so ask the seller who the finance is with and you should be able to find an office not too far away where you could both meet and settle it up.

andyr · Post by **andyr** » Tue Mar 06, 2007 10:00 am

G, Kate can help you here, as she used to work for the motor dept. in HBOS.

Give us a call tonight if you need any advice, and I'll stick her on the phone.

Cheers

Andy

Chris200 · Post by **Chris200** » Wed Mar 07, 2007 10:31 am

My understanding of this is that you need to get details from the finance company to state how much is left owing on the car. You then pay the money to the finance company, NOT the seller as he technically does not own the car, and when you have received conformation that the finance has been cleared, the car is the yours.

However, a friend of mine who used to be a trader said that before you do this, get an agreement drawn up and signed and witnessed by both the seller and yourself that states when the finance has been cleared the car is then yours. Otherwise he coulod just run away with a car that you have paid the finance for!! Also sign the V5 before hand and you keep the original copies and send the details off. Don't leave anything with the seller

andyr · Post by **andyr** » Wed Mar 07, 2007 12:37 pm

Chris200 wrote:My understanding of this is that you need to get details from the finance company to state how much is left owing on the car. You then pay the money to the finance company, NOT the seller as he technically does not own the car, and when you have received conformation that the finance has been cleared, the car is the yours.

You cannot do this !

The finance company will not tell you how much is oweing on the car or any details about the finance on the car.
This would be breach of the data protection act.

daibill · Post by **daibill** » Wed Mar 07, 2007 1:44 pm

Was recently in a similar position when I wanted shot of my LCR. Seat told me a settlement figure and it worked like this.
The prospective new owner and the seller can be on the end of the phone together with the seller informing the finance company that he wishes to sell to this person(hands over the phone) . Finance company then tells buyer how much is owning on the car and seller then pays the finance company. if it's via card the finance is ended there and then or by other means a few days later. Letters would be drawn up to both buyer and seller and finance is thus ended on the car. Then it's a normal tranfer of ownership.

listie · Post by **listie** » Wed Mar 07, 2007 6:33 pm

As I see it you have 2 ways to do this

Safest way to do this is to get a legal contract drawn up that you both sign and agree to, basically the guy selling the car agrees to pay the finance off with the money your paying for the car.

Get the guy selling the car to tell you how much the finance is and say for example you buy the car for Â£10,000 - Â£6250 is owed to the finance company, Â£3750 is his, you write a cheque / bankers draft for Â£6250 payable to the finance company, give the chap selling the car the rest in cash or whatever is agreed on

HTH
Si