Car on finance - how to buy

jackcramerr · September 24, 2016

I am looking at a car that has finance on it.

How can one purchase this car from the seller? Where should I start from amd what should I be doing ?

Thanks.

Bluesman · September 24, 2016

If it was me I would walk. There are plenty out there without having finance on them.

ahmedali44 · September 24, 2016

One way is to ask him to clear finance in front of u @ get it in writing or get them to email u. once it's cleared it be will ok or minus money from selling price plus make sure it's paid at least 2 yrs of finance before you can clear it.good luck hope this helps

sorcerer · September 24, 2016

I'm with Mike on this, walk away.

djkenn · September 24, 2016

Interesting. Experian manage a database of cars that have been financed in such a way that ownership of car should not be transferred without clearing the outstanding balance owed. As a private individual you can check whether finance is owed, but what I don't know is how as an individual you can have the finance flag removedmif the owner says they have paid the balance. I believe only credit providers can remove the flag.

Personally I would not buy a car without a clear Experian check. Doesn't matter what the current owner says, if you take ownership, you are liable for the debt. If there is a problem, the credit reference agencies will link that debt to your own credit score. Credit scores are no so ubiquitous that it is hard even to open a bank account with a credit score with negatives on it.

jackcramerr · September 24, 2016

Car is a company owned car. Very common to see it on finance because of the age and price.

I am going to ask the seller how he intends to clear the debt. I have phone number of the finance company though hpi check but it is weekend now. I know the person has sold cars in the past and dealers have been buying from him.

Linas.P · September 26, 2016

This is simply not practical for buyer, nor for seller that the finance is outstanding, because the seller needs to make discount equal to finance + interest and the buyer needs to find how to pay somebody's else debt. So there is simple question why don't seller sorts outs the finance before selling the car to make it more convenient for both (there is no reason why not). Generally, speaking car on finance is equivalent to stolen car, unless the finance is cleared before the purchase.

There should be no cars with outstanding finance on sale, if it is on sale and seller doesn't state that - it is quite obviously dodgy deal.

sorcerer · September 26, 2016

On 24/09/2016 at 2:33 PM, jackcramerr said:

Car is a company owned car. Very common to see it on finance because of the age and price.

I would have thought a company would be able to clear off (pay off) the finance easier than a private individual. My wife (a VAT Inspector) confirms what djkenn said above, ie, the finance goes with the car. If the current owner doesn't clear it, you become liable for it. Definitely something not quite right with this so I'd still walk away.

jackcramerr · September 26, 2016

It is coming to two options

I pay deposit, he clears the debt and provides proof

I pay the finance company the balance and whatever left is paid to this guy.

Linas.P · September 26, 2016

How about:

- you pay deposit, he doesn't clear the debt and you end-up (not) going to the small claims court for fraud (because it will not be financially feasible).

- you pay finance company the balance and the guy sells the car to somebody else..

- he "pays" the finance, you buy the car and 6 month later bailiff comes in to take you telly...

- or else...

The only acceptable way:

- you give him nothing, he clear the balance and reports back with evidence, you check the car again to make sure he have not forged his evidence and when all clear, you buy the car for the market price.

This is dodgy deal, there are no reason why car is being sold with outstanding finance on it except to try to fool somebody. You don't need to give him any deposit to have the finance cleared - there shouldn't be any outstanding finance to begin with.

jackcramerr · September 26, 2016

hmm..

Understood. Just worth pointing out I guess... car is an expensive one and many people in UK get things on finance? This is a third car I have seen on finance ...

sorcerer · September 26, 2016

51 minutes ago, jackcramerr said:

hmm..

Understood. Just worth pointing out I guess... car is an expensive one and many people in UK get things on finance? This is a third car I have seen on finance ...

I would imagine most people get finance for a car and there's nothing wrong with that whatsoever. The problem comes when the owner wants to sell it before it's paid for and before the outstanding finance balance is cleared off.

Linas.P · September 26, 2016

1 hour ago, jackcramerr said:

hmm..

Understood. Just worth pointing out I guess... car is an expensive one and many people in UK get things on finance? This is a third car I have seen on finance ...

As sorcerer mentioned... it is nothing wrong getting car finance. Try to sell it with outstanding finance is fraud. In fact I haven't see a single one with outstanding finance - that is the reason I always do car check before buying (for like £2.99 per car), but so far I have never seen one flagged. I guess the general rule applies - if it sounds to good to be true - it probably isn't true.

I guess somebody can point out that owner, may have financial problems and needs to sell car, but I am sure in such case:

- car would be repossessed by financing company, usually they have clause with acceptable terms on repossessions considering how much you have already paid and how much you have left. In which case outstanding finance would have be cleared.

- or the debt can be restructured to kind of loan. So the car can be cleared of finance and sold, then the gains used to cover loan..

.. anyway any reputable car financing company would have some options for person who cannot afford repayments and it is just matter of discussing it and finding compromise.

What is the car with outstanding finance - is when fraudulent owner doesn't want to agree to compromise, doesn't want to loose any money on settling the finance and want to sell the car for full price, without actually owning it. That as well happens with middle man, where the owner sells the car to fraudulent dealer or friend for peanuts, expecting that the new owner will cover the debt considering they have sold it cheaply, then new owners goes on selling it without settling the balance for double profit.

jackcramerr · September 26, 2016

Got it. I have the finance company phone number and I will call them and see what they have to say about it. I have the lease agreement number as well.

Going to see how deep the rabbit hole is.

NemesisUK · September 26, 2016

What's so special about this particular example, that you go to such lengths?

Surely there must be cars out there finance free?

Linas.P · September 27, 2016

15 hours ago, jackcramerr said:

Got it. I have the finance company phone number and I will call them and see what they have to say about it. I have the lease agreement number as well.

Going to see how deep the rabbit hole is.

Finance company are not allowed to give you details of the settlement amount due to the Data protection Act, that is why usually it should be dealt by current owner.

Generally, I see no reason why legit seller would want to transfer the hassle to the buyer knowing it would put off 99% of buyers. Except of the reason hoping that 1% will get on the hook and will be easily fooled into paying somebody's else debts. Buy I am starting to repeat myself here....

jackcramerr · September 27, 2016

I see all the valid points you guys made and I am aware of them.

This is a 60k car with original value of 80k. The owner of the company is the seller. Last car I bought for 50k belonged to the same company and hence I came in contact with the guy.

Conclusion is, debt to be cleared before purchase. Once cleared then I can confirm with financial company and purchase the car. How does this sound?

Linas.P · September 27, 2016

Yes.. I think that is fine. As long as you can confirm the debt was cleared with the actual financing company - it will be as any other purchase. As well financing company can confirm that, but as above they cannot confirm the settlement figure, just to state if it is settled or not.

normski2 · September 27, 2016

1 hour ago, jackcramerr said:

I see all the valid points you guys made and I am aware of them.

This is a 60k car with original value of 80k. The owner of the company is the seller. Last car I bought for 50k belonged to the same company and hence I came in contact with the guy.

Conclusion is, debt to be cleared before purchase. Once cleared then I can confirm with financial company and purchase the car. How does this sound?

I don't see a problem with doing this.

When I bought my current 250 the owner had to clear his finance debt. This he did prior to my purchasing of the car and showed me all the paperwork confirming the debt had been cleared.

jackcramerr · September 28, 2016

What about this option:

We agree to a price. I pay the guy price minus the settlement debt. The debt to be confirmed from the seller and the financial company and paid by me.

This way I can deal with the debt and own the car. Thr question is though, how is invoice generated. And I will require a VAT invoice.

Linas.P · September 29, 2016

I think this is key of the discussion:

On 9/27/2016 at 4:17 PM, normski2 said:

This he did prior to my purchasing of the car and showed me all the paperwork confirming the debt had been cleared.

.. and this is completely fine, but not the same as below:

12 hours ago, jackcramerr said:

We agree to a price. I pay the guy price minus the settlement debt. The debt to be confirmed from the seller and the financial company and paid by me.

This way I can deal with the debt and own the car. Thr question is though, how is invoice generated. And I will require a VAT invoice.

That won't happen. As mentioned above car finance company cannot issue any settlement in your name or let you know what it is directly. Yes current owner can provide you with the figure and give you equivalent discount, but in this case you still won't get VAT invoice for the car finance part.

As it seems the car finance is not secret here - I do not understand why current owner prefers give you discount for finance, but don't want to pay it himself (which would be easy option for him and for yourself)? What is the trick here?

sorcerer · September 29, 2016

14 hours ago, jackcramerr said:

What about this option:

We agree to a price. I pay the guy price minus the settlement debt. The debt to be confirmed from the seller and the financial company and paid by me.

This way I can deal with the debt and own the car. Thr question is though, how is invoice generated. And I will require a VAT invoice.

There's still something dodgy about this. The only legitimate way where all parties are covered is for the current owner to pay off what he owes to the finance company and then, when he becomes the full, legal owner of the car, he can sell it to you.

You've already said that it's a company car so I don't see why the company is so reluctant (or maybe unable?) to pay what is owed to the finance company and then legitimately sell it to you.

jackcramerr · September 29, 2016

I am going to have all this discussion with the seller. I am arming myself thanks to all the responses.

djkenn · September 30, 2016

I think I get this now. If the guy has a car on dealer finance, and the loan is still being paid, the normal way to get out is to go back to the dealer. They will offer less than the value of the car because they think they have him on the back foot. So him selling privately then paying out the finance company means he will save money.

Remember also that a payout figure from the lender includes a penalty which covers them for the interest they will not get because it is paid out early. So make sure it is a real payout figure and not a dealer estimate of the payout figure.

sorcerer · September 30, 2016

Hmm... you may be right Duncan but earlier in the thread the OP says that it's a £60k car with original value of £80k. Of course, there's a gazillion factors that could affect the value and without knowing the full story and all the facts we're just making assumptions, but I still put a lot of store in the old saying 'if something seems too good to be true, it usually is'.

Still something dodgy to me, but then again I'm just paranoid