Buying a car with existing/outstanding finance?

[Dazmo]

I need some advice please all,

Im Buying a car from a friend at work, everything is legit and the car is great, there is just one issue and that is that the car has outstanding finance.

Now im not sure how to go about this, obviously i will first leave a deposit on the car and get a receipt for this, subject to the remaining balance being paid and the finance being cleared.

Now my mate is telling me to basically pay the finance on the car and then they will pay the difference and sort the paperwork so that i now own the car.

But im worried about this as i dont want to pay off the finance and then be left with no car or money, even though he is a friend i trust no one.

So would i phone the finance company and pay off the debt and then have all the details in my name to say i now own the car?

Now im not sure what proof/paperwork i will need to cover myself, what steps should i take when paying off someone elses outstanding finance?

 

[kirsty76]

really you should get him to pay off his outstanding finance then when you have done all your checks to make sure it has been paid hand the money over to your friend.

 

[Mike B]

The usual position is that they own the car but he is the registered keeper so he can hand over the car and change the reg to you but you must keep back enough of the price to pay off the finance.Agree all this with him and them in writing and get receipts

 

[jojo]

OK, trusty friend, get him to phone the finance company in front of you and ask how much the settlement figure is? Then you pay them over the phone in your own time, and your mate hands over the V5C docs and carkeys to you. Any difference between the finance settlement and the price he's selling the car to you would then be sorted between yourselves.

That's how I would do it.

 

[Dilligaf-UK]

I agree with JoJo - but in addition, I would ensure that the Finance Company confirm over the phone, and in writing (email should suffice) that they no longer have any financial interest in the Vehicle - they will then notify Experian (or whoever it is) to that effect, so any HPI Check will come back clear....

 

[Dazmo]

I agree with JoJo - but in addition, I would ensure that the Finance Company confirm over the phone, and in writing (email should suffice) that they no longer have any financial interest in the Vehicle - they will then notify Experian (or whoever it is) to that effect, so any HPI Check will come back clear....

I shiould add that his missis actually works for the finance compnay that they have their finance with.

The outstanding finance is £7500 and ill be buying the car for £6500, so should i ensure they pay the extra £1k first, get the figure down to £6500, get a settlement figure, pay the full £6500.

Then get the car off them there an then including the V5C? and then wait for the settlement paperwork in the post to confirm this is now HPI cleared.

 

[jojo]

I shiould add that his missis actually works for the finance compnay that they have their finance with.

The outstanding finance is £7500 and ill be buying the car for £6500, so should i ensure they pay the extra £1k first, get the figure down to £6500, get a settlement figure, pay the full £6500.

Then get the car off them there an then including the V5C? and then wait for the settlement paperwork in the post to confirm this is now HPI cleared.

Wow, that's such a bad position to be where the finance owed on the car is more than what the car is worth! So in essence, the seller is paying a grand to get rid of his car!!

The outstanding finance needs to be paid in full before you can actually claim ownership of the car, so you need to pay the outstanding figure off in one go. Basically, you need your mate to pay the £1k and you pay the £6.5k for it to work, or you pay the full amount, and he somehow gives you a grand to make the figure the agreed £6.5k.

 

[Dazmo]

Wow, that's such a bad position to be where the finance owed on the car is more than what the car is worth! So in essence, the seller is paying a grand to get rid of his car!!

The outstanding finance needs to be paid in full before you can actually claim ownership of the car, so you need to pay the outstanding figure off in one go. Basically, you need your mate to pay the £1k and you pay the £6.5k for it to work, or you pay the full amount, and he somehow gives you a grand to make the figure the agreed £6.5k.

Ok my mate is now going to pay off the difference, reducing the finance to 6.5k (what i must pay) then i am going to ring the finance company, get the settlement figure and pay it with my credit card over the phone. Once done we then complete the V5C paperwork and hand over the car

i will then wait for written confirmation that finance is clear

 

[Broken Byzan]

Seems like a plan, and using your card gives you some legal protection there too

 

[Mike B]

Just to be sure I would get him to sign over the car to you with all the papers so that you can send off the change of registration before you pay off the debt

 

[Lings]

It would be diferent if the outstanding amount was less than a third of the original amount borrowed for the car .In your case before even giving them a deposit get the settlement figure which will be less than the full amount owed as of today .then get the person who has the finance to settle before you hand any cash over .best frineds family all fall out over cash so be wary mate .

 

[Dazmo]

It would be diferent if the outstanding amount was less than a third of the original amount borrowed for the car .In your case before even giving them a deposit get the settlement figure which will be less than the full amount owed as of today .then get the person who has the finance to settle before you hand any cash over .best frineds family all fall out over cash so be wary mate .

This is the problem, he cant pay off the finance because he does not have the money, he is relying on me to pay the finance with the sale of the car.

He wants to buy a new car with a new finance deal but cannot continue until he has cleared this finance and sold the car off to me.

So i have requested from him an exact settlement figure, i will then turn up view the car etc, ring his finance company and pay off the exact £6.3k clearing the finance and i will request confirmation of this.

I will then complete the V5C and all paperwork there and then, will be paying with credit card to cover myself and will also request a written receipt from him.

 

[murran]

a lesson there too for all people buying cars on finance. dont bother! if you havent got the cash to buy a new car.... buy an old one!

 

[Lings]

a lesson there too for all people buying cars on finance. dont bother! if you havent got the cash to buy a new car.... buy an old one!

If everyone did that no new cars would be sold ....

 

[DJM1982]

i done a similar thing.
bought my current car off a friend at work with some finance still outstanding.
She got all the outstanding finance figures sent through to her from audi and let me see all documents. I then paid off the finance by sending them a cheque and paid her the outstanding. So i paid her £6000cash and £4000 to the finance company. Audi sent both me and her a copy confirming the balance had been paid off.
All sorted, not a problem.....

 

[Mike B]

This is the problem, he cant pay off the finance because he does not have the money, he is relying on me to pay the finance with the sale of the car.

He wants to buy a new car with a new finance deal but cannot continue until he has cleared this finance and sold the car off to me.

So i have requested from him an exact settlement figure, i will then turn up view the car etc, ring his finance company and pay off the exact £6.3k clearing the finance and i will request confirmation of this.

I will then complete the V5C and all paperwork there and then, will be paying with credit card to cover myself and will also request a written receipt from him.

Paying by credit card gives you no cover unless he signs the car over to you first you are simply giving him money to pay off his debt with no security

 

[tku]

Really is no biggie. Tell him get settlement letter. Then call them together you speak to them regarding payment and car all cleared and then sign v5. Done. I've done it before and had no worries. The only worry as far as I'm concerned is buying a car that has been not declared as still on finance. However all seems fine to me! Good luck and don't worry.