buying a car with outstanding finance

Char1

Hi advice needed please. I am looking to buy a new car, i have seen 1 i like and it's a good price the only thing worrying me is that in the ad on auto trader the seller has stated that the car has outstanding finance on it. It's her finance and she has said it will be paid the minute the car is sold. I have spoken to the seller this eve and asked her about this, she says her finance company has told her the easiest way for the sale to take place is for me to give her the money and she gives me the log book and other paperwork and then she goes to the bank to pay the finance in full. the car is up for £5500 and she has told me the outstanding finance left on the car is £5000. I have never had finance of my own but i was under the impression that if a car was bought with outstanding finance then the car was still the legal property of the finance company? So the obvious concern is what if she doesn't go straight to the bank? My partner has suggested we pay the finance company direct whist at her house then drive the car away? is this possible as we are not the finance companies customer? any advice would be much apprieciated.

continualdiamond

The seller of the car needs the finance companies permission to sell the car as it legally belongs to them. They cannot just sell it and then pay off the finance, if thats what they're thinking of doing.

I'd ask for evidence of them having got permission from the finance company that they can sell it.

I suspect they've got a quote re part exchanging it and cannot get the £5000 they need to pay off the finance, hence trying to sell it privately.

karenx

I wouldn't touch a car with outstanding finance, seller could just keep the money and you would be left to pay it

Char1

Seller says she has spoken to the finance company about the sale, so i'm assuming she has told them she is selling it!! i am not prepared to hand over £5000 in cash and take her at her word, as i don't know her from adam and it all could be a con but i am wondering if we can pay the finance off of our card to the finance company over the phone whilst at her house then take the car and request the finance co send a reciept throught the post? I'm still not convinced about the whole thing but just want to explore all avenues before i decide not to even bother going to look at it!

continualdiamond

Just because the seller has spoken to them about it to me i wouldn't automatically assume they have permission to sell it. The seller cannot just ring up and notify them that they're selling the vehicle, they need consent first.

They could of just asked what the cost would be if they settled the agreement early, £5000 might be just the outstanding finance left, what about extra costs added on for ending the agreement early.

I asked my finance company for a settlement agreement, i got 1 in the post, but never did i mention that i wanted to sell the vehicle, i just wanted to know what i'd have to pay if i was to settle the agreement. (so i knew what i had to get if i part exchanged it)

With that information a finance company is going to assume you're going to pay off the finance and then the goods don't belong to them anymore, but belong to their customer.

Id be wary paying off someones finance for them, as thats what it will look like at the end of the day and then on paper in the finance companies eyes the customer (seller) now owns the goods, not you.

Char1

Thanks for that i never thought of that!!! like i said i have only had a brief chat with seller i told her i'd get back to her nearer the weekend as i wanted time to think (and get some advice on here!!) thanks for everyone who has posted.

cheeky

i bought a car from a dealer and HPI came up with outstanding finance. He gave me the details, i called the up and they said it was now clear (ex-lease car)

I suggest you do the same and ask the questions. If they owe £4k then only give them £1k

vaio

it's nothing to worry about or put you off the car.

You need to get a settlement figure from the finance company and if you decide to buy the car then either do your idea of clearing the finance over the phone or go with the buyer to the bank make sure she pays cleared funds direct into the finance company account.

A quick call to the finance company will tell you the best way to do it.

Inactive

Too much hassle, buy a different car that the seller actually owns.

If she cannot afford to pay for the car, chances are that it has been neglected anyway.

burnsguitarman

We sold a car on behalf of our son last year (he had gone to work abroad), this had outstanding finance, and to be honest I thought he had no chance of a sale. Anyway, once we had found a potential buyer, we explained the exact position. My son contacted the finance company for a settlement figure, and arranged with them a "password" for security so that we could contact them on his behalf for a period of 24hrs. On the day of the sale, the buyer paid the money directlly to the finance company, (this was further complicated as it was not enough to settle the finance and we had to make an additional payment at the same time).We were given verbal clearance of the account later the same day whilst the buyer was present. So I'm sure other finance companies, are used to similar transactions!
I would say that a great deal of trust and care, has to given in these circumstances, but if this is the car for you, and you are quite happy with the sellers reasons. Then go for it, there are genuine people out there.
BUT take every precaution!

davemorton

I have sold a couple of cars like this. What I got the purchaser to do was get a bankers draft for the settlement figure, and we went to the bank together to pay this into the finance companys account, then the buyer handed me the balance and I handed over the car, simples.