Buying a car that is subject to a finance agreement?

feenster99 · 22 Feb 2006 at 18:53

Hi all,
Has anyone ever bought a car from a private seller, that has a finance agreement attached to it (ie., the seller bought it on finance and hasn't finished paying it off)?

I understand that the finance company are the legal owner of the car, and that it has the potential if not organised right to lose me the car and my money. I wondered what the best way of going about the sale was? There are a few options:

1) Get seller to get a short term loan and pay it off. I then pay the seller directly (preferred but unlikely to happen)
2) I pay the remaining finance balance direct to the finance company by bank draft, and the rest in cash to the seller
3) I pay the seller directly. I then watch him send off a cheque to the finance company paying it off (most risky!)

What other options are there? Anyone done this before - how did you go about it?

Matt

jon.bda · 22 Feb 2006 at 18:54

Find another car!.

Simon · 22 Feb 2006 at 18:59

Don't bother it really is not worth the risk

great advice · 22 Feb 2006 at 18:59

Pay the guy with a cheque adressed to his finance company, also make sure you have a written quote on the outstanding finance. The interested in added monthly so the amount owed will differ at different times of the month. and pay the rest of the balance as you would normally.

Its very dodgy though and id walk away if you can.

Scottland · 22 Feb 2006 at 19:02

If you want the car, don't go near it until he has paid off the remainder of the balance, and has a certificate from the finance company to proove that it's been paid. Also, once this has been done get a HPI check to be done.

If it's in negative equity (if its french or a rover, then it probably will be) then the remander of the balance could well be a lot more than the car is actually worth. If he doesnt pay it off first then he might not have enough once you've paid him for the car, this is when things start going wrong!

feenster99 · 22 Feb 2006 at 19:09

Humm, thanks chaps. The car is a (BMW) Mini Cooper, so it *shouldn't* be in the negative equity thing, as he has only had it a few months.

I feel the same as you have already said that it is dodgy - however, the car is the ideal spec. for me, so I would be keen to find a way around it. Would you put down say £100 deposit on the condition that the rest of the finance is paid off (with proof) with the rest to follow to him directly upon receipt of this?

Matt

MrMoon · 22 Feb 2006 at 19:12

Scottland said:
If it's in negative equity (if its french or a rover, then it probably will be) then the remander of the balance could well be a lot more than the car is actually worth. If he doesnt pay it off first then he might not have enough once you've paid him for the car, this is when things start going wrong!

Thats BS you cant go into negative equity with a PCP car because they have a guarenteed future value if you give it back to the dealer for example my C3 is worth £1k more than whats left on the finance if I buy another citroen but im not so I will lose out,

dont touch are car from a private seller with finance

great advice · 22 Feb 2006 at 19:12

No, just tell him to clear the finance and show you proof.

One thing you could do is drive to the finance company and pay it in person, my wife has done this before. Then its cleared there and then and you can carry on purchasing your car.

TBH though, new mini's are ten a penny so finding another shouldnt be a problem.

feenster99 · 22 Feb 2006 at 19:18

OK cheers, ill bear all this in mind. I am having the car inspected tomorrow, so should have a decent picture of how to go forward or walk away.

Cheers,
Matt

Maz · 22 Feb 2006 at 20:07

MrMoon said:
Thats BS you cant go into negative equity with a PCP car because they have a guarenteed future value if you give it back to the dealer for example my C3 is worth £1k more than whats left on the finance if I buy another citroen but im not so I will lose out,

dont touch are car from a private seller with finance

YOU CAN get into Negative Equity with a PCP.

The GFV is there so that if you are in a state of Negative Equity at the end of the agreement you have the right to get out of it with no penalties.

With a PCP if you put a small deposit down you are instantly in a situation of Negative Equity, you don't work out of it till you are nearer to the end of the agreement.

It's designed so that at the end of the agreement the GFV is smaller than what its actually worth giving you some equity towards your next car.

penski · 22 Feb 2006 at 21:45

Car finance is for chumps.

*n

[TW]Fox · 22 Feb 2006 at 21:55

penski said:
Car finance is for chumps.

*n

Not everyone likes old stuff.

For some, its like a mortgage. You could either.. have a mortgage, or live in a box. Not everyone wants to live in a box

Simon · 22 Feb 2006 at 22:01

penski said:
Car finance is for chumps.

*n

Loans ok?

penski · 22 Feb 2006 at 22:15

[TW]Fox said:
Not everyone likes old stuff.

For some, its like a mortgage. You could either.. have a mortgage, or live in a box. Not everyone wants to live in a box

It's nothing to do with old stuff, thank you very much.

It's not like a mortgage at all. In fact, it's more akin to renting, if you're so insistant on making a property reference.

I rent a wonderful flat right on the riverside in a private estate with a huge private terrace and a lot of space.

The alternative is buying a smaller place...In an area that isn't as quiet but at the end of the day, after a few years, you own your own house and can do whatever you like with it.

OR...You buy a decent house outright with no mortgage

You pay finance on a car with an image to keep up with the Jones', end up paying completely over the odds, never own your car and suffer financially.

The alternative is buying a car outright with a loan, owning it, being able to do whatever you wish but paying it off for a few years.

OR...You buy a car you want for cash and don't have to suffer financially.

*n

Maz · 22 Feb 2006 at 22:40

penski said:
It's nothing to do with old stuff, thank you very much.

It's not like a mortgage at all. In fact, it's more akin to renting, if you're so insistant on making a property reference.

I rent a wonderful flat right on the riverside in a private estate with a huge private terrace and a lot of space.

The alternative is buying a smaller place...In an area that isn't as quiet but at the end of the day, after a few years, you own your own house and can do whatever you like with it.

OR...You buy a decent house outright with no mortgage

You pay finance on a car with an image to keep up with the Jones', end up paying completely over the odds, never own your car and suffer financially.

The alternative is buying a car outright with a loan, owning it, being able to do whatever you wish but paying it off for a few years.

OR...You buy a car you want for cash and don't have to suffer financially.

*n

Hmm sounds very clever NOT.

So say for example you borrow £8k to buy a car from a Bank, or you borrow £8k from a finance company to buy a car.

How is one different from the other?

Except for the fact that with Car Finance you have more rights over the vehicle than you would with a Bank Loan, because the Finance is secured on the vehicle and therefore as much the Finance companies responsibility as it is the customers.

So say for example the manufacturer of the said vehicle goes boobs up and subsequently the vehicles now hold no value, you could have paid either the full £8k and lost it - or paid £4k and a little interest and then handed it back because you know its worth bugger all.

penski · 23 Feb 2006 at 07:43

Maz said:
So say for example you borrow £8k to buy a car from a Bank, or you borrow £8k from a finance company to buy a car.

How is one different from the other?

With a loan you own the car.

With finance...You don't.

Simple, really.

If you buy at £8k with a loan and the value halves, you sell at £4k.

You still own the car.

Better yet - buy the car outright to start with.

*n

Maz · 23 Feb 2006 at 12:53

penski said:
With a loan you own the car.

With finance...You don't.

Simple, really.

If you buy at £8k with a loan and the value halves, you sell at £4k.

You still own the car.

Better yet - buy the car outright to start with.

*n

Ownership is overrated, What can't you do with a car you bought on HP that you can with a car you bought with a Bank Loan?

I can tell you what you can do with a car that you bought on HP and can't do with a car you bought with a Bank Loan.

great advice · 23 Feb 2006 at 12:57

Maz said:
Ownership is overrated, What can't you do with a car you bought on HP that you can with a car you bought with a Bank Loan?

I can tell you what you can do with a car that you bought on HP and can't do with a car you bought with a Bank Loan.

You cant sell it? what if six/twelve months down the line it turns into a cash cow or you want to move onto something else? its gunna cost a fortune

with an unsecured loan you can just move on

Car finance is there for those who cant get a decent unsecured loan.

tom_nieto · 23 Feb 2006 at 13:00

There must be hundreds of other mini's about. You should save yourself the hassle and look at some others.

Maz · 23 Feb 2006 at 13:02

great advice said:
You cant sell it? what if six/twelve months down the line it turns into a cash cow or you want to move onto something else? its gunna cost a fortune with an unsecured loan you can just move on

Car finance is there for those who cant get a decent unsecured loan.

You can sell it though.

What do you mean by "cash cow"?

If you want to move onto something else you part exchange it and buy a different car.

With car finance it's easier to get a lower rate than it is with an unsecured loan, because the loan is secured to a tangible object which holds value.

Where as with a personal loan it's all down your track record and age.