Buying a car with outstanding finance

Soldato
Joined
14 Feb 2006
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Surrey, UK
Hi all,

This is the first time I've dealt with vehicle finance, so please forgive me.

The car is one a friend of mine is looking to buy. It's on Hire Purchase. The sale price is below the settlement figure (don't ask me why the seller agreed to this).

How is this to be done safely? I suspect that both the seller and buyer should pay the finance company, to the value totalling the settlement figure.

Do we require the settlement figure in writing? And I assume the finance company needs to be informed of the intentions of the seller to settle the finance with 2 payments. And how should each party pay, so that they're protected in case the other party doesn't/won't pay?

Again, please excuse ignorance :)
 
He'll need to pay it all off usually. And Then you want it in writing at the very least that its paid. I think you can run a check and it'll show who the company the finance is outstanding with. You can phone and get the balance I believe but thats the most they can do based on data protection. So if he says "i'll pay them over the phone with you here" before you let him go phone them directly and check he hasn't just phoned his mate to make you think its paid off.
 
What you want is to have the finance company confirm that they no longer have any interest in the vehicle.

I recently bought a car with outstanding finance, took all the guys details, copy of license etc I paid off the Finance there and then via CC and advised him once I had the letter from the finance company I'd pay the rest into his bank.

Yours seems a little straight forwards, have the seller pay the difference between what you are paying and the settlement figure, sign over the V5, then pay the finance company the remaining.

The settlement figure should be able to be given over the phone, if however the seller refuses to pay that part of the finance off then technically he can't sell the car as it doesnt belong to him is my understanding. The finance company could simply come to your door and remove the car.
 
If he's a friend then there's no harm sitting with him and getting the finance company on the phone. I'd want him to pay the difference to the finance company first, then you pay the finance company the sale amount to settle it. The finance company will be able to confirm over the phone that they have no further interest in the vehicle, but HPI checks wont update for a few days/weeks.
 
Thank you all! :)

He'll need to pay it all off usually.

I don't believe the seller has the cash in hand to pay off the total balance (it's around £6,000). Obviously, we don't want to give them the cash, since there's no guarantee that they won't run away with it :D

Yours seems a little straight forwards, have the seller pay the difference between what you are paying and the settlement figure, sign over the V5, then pay the finance company the remaining.

That's a very good idea, I'd not thought of that. Is doing it this way better than both the seller and buyer paying the finance company directly?

If he's a friend then there's no harm sitting with him and getting the finance company on the phone. I'd want him to pay the difference to the finance company first, then you pay the finance company the sale amount to settle it. The finance company will be able to confirm over the phone that they have no further interest in the vehicle, but HPI checks wont update for a few days/weeks.

Also sounds sensible - do it all in one phone call.

[TW]Fox;28072485 said:
It isnt his car to sell without permission from the finance company..

Interesting, did not know this. So we should be expecting that the seller gets written permission for the sale from the finance company before the transaction goes ahead?
 
Interesting, did not know this. So we should be expecting that the seller gets written permission for the sale from the finance company before the transaction goes ahead?

Its true that you cant sell the car without the finance company's permission - it's their car after all!

However, in this instance, you're effectively settling the finance then immediately selling it after. There's a minor element of risk doing this with a complete random but if you trust the person then it's not an issue.

You're settling the finance for him on the understanding that he'll give you the car after that. In reality, it's no more of a risk than buying a car in cash, the seller could drive off with the cash when you hand it over!

Settle the finance, sign over the V5 and dont worry about it. If it was a friend of mine, I'd just transfer the money to him and let him settle the finance in full first
 
They will however usually give permission with absolutely no issue so long as they are paid in full before the ownership is transferred.

Get the seller to confirm the finance company and to have them confirm they will send an email to the new buyer immediately on receipt of clear funds to state they no longer have an interest in the car. If they wont do this and the buyer won't stump up the funds himself to clear the balance in time to get written confirmation before collection then walk away.

The buyer can contact the finance company to confirm that 1. they are real and 2. they have an interest in the car pre-settlement.

Might mean spending a couple of hours doing the purchase rather than handing over cash and walking away, but i'd rather do that than lose what I expect is thousands of pounds.
 
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