Finance Issue - Advise Needed

[Chris_A]

A friend of mine recently purchased a 2003 Astra GSI for the sum of 6k, the hpi check came up the car still hand finance outstanding the vendor clarified that the outstanding finance would be paid off with the money that was used to purchase the vehicle; he also confirmed this in writing on the receipt signed and dated.

My friend had spoken to the finance company previous and they said that the finance wasn’t tied to the car but was tied to the vendor.

Now my friend has decided to sell the vehicle two months since he purchased it and the car is still on finance, after many calls with the vendor and with the finance company the issue is the finance is tied to the car.

The vendor has quite evidently pocketed the 6k, and my friend is left with a car that is in fact worthless, the car I presume is owned by the finance company until they receive full payment for it, if the vendor decided to stop paying the instalments they will reposes it.

For instance if the car was a total lose due to fire, theft or a collision who would be paid out the owner or would the finance company be paid off then the remaining amount paid to my friend?


Any suggestions on how we can resolve this issue?

[TPS]

To be honest the only way i can see this being sorted out is to take the vendor to court which means getting a solicitor and starting legal action.If you have written and signed confirmation from him that it would be paid off before you collected it etc then this could be used as evidence against him.May be worth speaking to citizens advise.

Edited by TPS on Thursday 12th July 09:34

[Chris_A]

Yes that is the only option I could suggest.

The issue is even if this guy is found guilty; my friend could be waiting for an eternity to receive his six thousand back.

If the judge ordered the vendor to pay back the six thousand, the vendor isn’t exactly well off and may get away with paying a nominal figure each week i.e. £5

Unfortunately as I suggested there is no quick fix in this situation.

Edited by Chris_A on Thursday 12th July 09:39

Edited by Chris_A on Thursday 12th July 09:40

[Vesuvius 996]

Expensive lesson, sadly.

Why didn't your mate pay the finance off directly before collecting the car?


He's fvcked, basically.

[Chris_A]

This is very true.

My dad did advise him of this before he bought the vehicle.

As i said there is no easy solution. In a word yes he is F**KED

Edited by Chris_A on Thursday 12th July 09:46

[Troesma]

What your friend should have demanded (a bit late now) is for himself to wire the money to the finance company at the moment of purchasing the vehicle, handling only the difference between sales price and outstanding finance to the seller.

That is easily done by requesting the vendor a final settlement figure IN WRITING from the finance company (which will also have a redemption quote with a fixed validity, usually 30 days.) Payment is tied to an account # so settlement is irrespective of where the money comes from.

Vendor can elect to wait handling over the vehicle until all funds cleared, but then you know you have settled any third-party claims on the goods. As a side note, it seems that he sold a car he did not own and for which he had no authorisation to sell from the finance company (a clause often seen in HP and PCP agreements) as the vehicle did not materially belong to him (here I don't know the particulars of the car finance deal). If that's the case, it is called fraud.

Looks like a solicitors case to me.

[Robin Hood]

Chris_A said:

For instance if the car was a total lose due to fire, theft or a collision who would be paid out the owner or would the finance company be paid off then the remaining amount paid to my friend?

In the event of a total loss claim the amount outstanding to the finance company would be paid to them, any excess left over would go to the insured making the claim, not the person financed.

[JustinP1]

Chris_A said:

This is very true.

My dad did advise him of this before he bought the vehicle.

As i said there is no easy solution. In a word yes he is F**KED

Edited by Chris_A on Thursday 12th July 09:46

There are a few points here.

In practicality your friend needs his money out of the car. In a similar thread like this I have seen a situation there it was the finance company themselves who formally contacted the original owner with a threatening letter to get them to pay.

The way the finance rules are, the finance company only have the right to reposess until a certain percentage of the car has been paid off - it may be that in effect the car cannot be reposessed which buys your friend some more time to contact the finance company to press them into action. It is in their own best interests to do something about this.

[Troesma]

JustinP1 said:

There are a few points here.

In practicality your friend needs his money out of the car. In a similar thread like this I have seen a situation there it was the finance company themselves who formally contacted the original owner with a threatening letter to get them to pay.

The way the finance rules are, the finance company only have the right to reposess until a certain percentage of the car has been paid off - it may be that in effect the car cannot be reposessed which buys your friend some more time to contact the finance company to press them into action. It is in their own best interests to do something about this.

They can repossess, however with a court order (even assuming it's a regulated agreement under the CCA). Materially, the car still belongs to the finance company if the finance has not been settled in full, and the vehicle acts as collateral.

Then, the sale in itself is fraudulent because the guy (very likely) had no right to sell the vehicle in the first place (so there is no material transfer of ownership.) The buyer became the new RK, NOT the owner, and seems has no rights to ownership until the debt is settled. That I believe is the issue.

[Chris_A]

As far as im aware with regards to the law the vehicle should not have been sold / released until all funds/finance were paid and cleared, is this correct ?

Edited by Chris_A on Thursday 12th July 10:35

[Troesma]

Chris_A said:

As far as im aware with regards to the law the vehicle should not have been sold / released until all fund/finance were paid and cleared, is this correct ?

Yep. You cannot sell what you do not own or what you have not been authorised (by the owner) to sell.

[JustinP1]

Troesma said:

JustinP1 said:

There are a few points here.

In practicality your friend needs his money out of the car. In a similar thread like this I have seen a situation there it was the finance company themselves who formally contacted the original owner with a threatening letter to get them to pay.

The way the finance rules are, the finance company only have the right to reposess until a certain percentage of the car has been paid off - it may be that in effect the car cannot be reposessed which buys your friend some more time to contact the finance company to press them into action. It is in their own best interests to do something about this.

They can repossess, however with a court order (even assuming it's a regulated agreement under the CCA). Materially, the car still belongs to the finance company if the finance has not been settled in full, and the vehicle acts as collateral.

Then, the sale in itself is fraudulent because the guy (very likely) had no right to sell the vehicle in the first place (so there is no material transfer of ownership.) The buyer became the new RK, NOT the owner, and seems has no rights to ownership until the debt is settled. That I believe is the issue.

Agreed. There are some situations whereby transfer of ownership WILL transfer though, especially if the buyer was unaware that in effect that the car was being sold 'by proxy'. Case law supports this.

My advice would be a step up of written statements to the old owner and finance company to sort the situation. I would let the old owner either buy the car back, or pay off the finance. By doing that and he fails to do either then that adds ammunition later on that he was indeed implicitly indending to profit from this situation, rather than making a 'mistake'.

[Troesma]

JustinP1 said:

Troesma said:

JustinP1 said:

There are a few points here.

In practicality your friend needs his money out of the car. In a similar thread like this I have seen a situation there it was the finance company themselves who formally contacted the original owner with a threatening letter to get them to pay.

The way the finance rules are, the finance company only have the right to reposess until a certain percentage of the car has been paid off - it may be that in effect the car cannot be reposessed which buys your friend some more time to contact the finance company to press them into action. It is in their own best interests to do something about this.

They can repossess, however with a court order (even assuming it's a regulated agreement under the CCA). Materially, the car still belongs to the finance company if the finance has not been settled in full, and the vehicle acts as collateral.

Then, the sale in itself is fraudulent because the guy (very likely) had no right to sell the vehicle in the first place (so there is no material transfer of ownership.) The buyer became the new RK, NOT the owner, and seems has no rights to ownership until the debt is settled. That I believe is the issue.

Agreed. There are some situations whereby transfer of ownership WILL transfer though, especially if the buyer was unaware that in effect that the car was being sold 'by proxy'. Case law supports this.

My advice would be a step up of written statements to the old owner and finance company to sort the situation. I would let the old owner either buy the car back, or pay off the finance. By doing that and he fails to do either then that adds ammunition later on that he was indeed implicitly indending to profit from this situation, rather than making a 'mistake'.

Problem is, from what is said in the post opening the thread the buyer knew from the onset (a) the car had outstanding finance (via HPI check) and (b) was told by the buyer the balance was to be cleared with the proceeds from the sale. Finance still outstanding, then a clear fraud case. This besides the question of the ability by the seller to transfer material ownership of the goods without knowledge of the finance company (even though this depends on wording in the agreement.)

Unfortunately, the buyer was naive and now faces nasty consequences : not only the car does not belong to him (as he knew the car was used as collateral for a loan) but he cannot unload the car into anyone else, because he does not own it. Simple. The only thing he would eventually be able to settle in court is the fraudulent sale onto him, not the question of reclaming ownership the vehicle (that seems clear IMHO.) If ruling comes in his favour, only then he would be able to reclaim ownership by settling the finance agreement.

Would recommend what you suggest as a kick-start : ask (via Solicitor, so parties see you're not joking) for all documentary evidence on the finance deal, and put some heat on seller. Note also that finance agreements (such as HP, PCP or plain leases) are typically non-transferrable, so the seller cannot use the tagline that he sold the car "under the condition and agreement by the buyer that the finance contract was being transferred onto him."

Seems a clear-cut case, but a battle in court unless you can corner this guy and force him to settle the finance.

Edited for typos.

Edited by Troesma on Thursday 12th July 12:37

[JustinP1]

Troesma said:

JustinP1 said:

Troesma said:

JustinP1 said:

There are a few points here.

In practicality your friend needs his money out of the car. In a similar thread like this I have seen a situation there it was the finance company themselves who formally contacted the original owner with a threatening letter to get them to pay.

The way the finance rules are, the finance company only have the right to reposess until a certain percentage of the car has been paid off - it may be that in effect the car cannot be reposessed which buys your friend some more time to contact the finance company to press them into action. It is in their own best interests to do something about this.

They can repossess, however with a court order (even assuming it's a regulated agreement under the CCA). Materially, the car still belongs to the finance company if the finance has not been settled in full, and the vehicle acts as collateral.

Then, the sale in itself is fraudulent because the guy (very likely) had no right to sell the vehicle in the first place (so there is no material transfer of ownership.) The buyer became the new RK, NOT the owner, and seems has no rights to ownership until the debt is settled. That I believe is the issue.

Agreed. There are some situations whereby transfer of ownership WILL transfer though, especially if the buyer was unaware that in effect that the car was being sold 'by proxy'. Case law supports this.

My advice would be a step up of written statements to the old owner and finance company to sort the situation. I would let the old owner either buy the car back, or pay off the finance. By doing that and he fails to do either then that adds ammunition later on that he was indeed implicitly indending to profit from this situation, rather than making a 'mistake'.

Problem is, from what is said in the post opening the thread the buyer knew from the onset (a) the car had outstanding finance (via HPI check) and (b) was told by the buyer the balance was to be cleared with the proceeds from the sale. Finance still outstanding, then a clear fraud case. This besides the question of the ability by the seller to transfer material ownership of the goods without knowledge of the finance company (even though this depends on wording in the agreement.)

Unfortunately, the buyer was naive and now faces nasty consequences : not only the car does not belong to him (as he knew the car was used as collateral for a loan) but he cannot unload the car into anyone else, because he does not own it. Simple. The only thing he would eventually be able to settle in court is the fraudulent sale onto him, not the question of reclaming ownership the vehicle (that seems clear IMHO.) If ruling comes in his favour, only then he would be able to reclaim ownership by settling the finance agreement.

Would recommend what you suggest as a kick-start : ask (via Solicitor, so parties see you're not joking) for all documentary evidence on the finance deal, and put some heat on seller. Note also that finance agreements (such as HP, PCP or plain leases) are typically non-transferrable, so the seller cannot use the tagline that he sold the car "under the condition and agreement by the buyer that the finance contact was being transferred onto him."

Seems a clear-cut case, but a battle in court unless you can corner this guy and force him to settle the finance.

Edited for typos.

Edited by Troesma on Thursday 12th July 12:15

Correct, but there may be a simpler route. In the situation I had seen the previous owner was still paying the monthly payments, as is I understand is in this case.

The finance company rang up the previous owner, told him when he was doing was illegal, told him of the consequences, and gave him a 'get-out' of refinancing the amount owing an another loan.

This may of course be secured elsewhere, or not at all, or even for a higher interest rate, which is indeed likely, but the main point is it got the new buyer off the hook.

[Troesma]

JustinP1 said:

Troesma said:

JustinP1 said:

Troesma said:

JustinP1 said:

There are a few points here.

In practicality your friend needs his money out of the car. In a similar thread like this I have seen a situation there it was the finance company themselves who formally contacted the original owner with a threatening letter to get them to pay.

The way the finance rules are, the finance company only have the right to reposess until a certain percentage of the car has been paid off - it may be that in effect the car cannot be reposessed which buys your friend some more time to contact the finance company to press them into action. It is in their own best interests to do something about this.

They can repossess, however with a court order (even assuming it's a regulated agreement under the CCA). Materially, the car still belongs to the finance company if the finance has not been settled in full, and the vehicle acts as collateral.

Then, the sale in itself is fraudulent because the guy (very likely) had no right to sell the vehicle in the first place (so there is no material transfer of ownership.) The buyer became the new RK, NOT the owner, and seems has no rights to ownership until the debt is settled. That I believe is the issue.

Agreed. There are some situations whereby transfer of ownership WILL transfer though, especially if the buyer was unaware that in effect that the car was being sold 'by proxy'. Case law supports this.

My advice would be a step up of written statements to the old owner and finance company to sort the situation. I would let the old owner either buy the car back, or pay off the finance. By doing that and he fails to do either then that adds ammunition later on that he was indeed implicitly indending to profit from this situation, rather than making a 'mistake'.

Problem is, from what is said in the post opening the thread the buyer knew from the onset (a) the car had outstanding finance (via HPI check) and (b) was told by the buyer the balance was to be cleared with the proceeds from the sale. Finance still outstanding, then a clear fraud case. This besides the question of the ability by the seller to transfer material ownership of the goods without knowledge of the finance company (even though this depends on wording in the agreement.)

Unfortunately, the buyer was naive and now faces nasty consequences : not only the car does not belong to him (as he knew the car was used as collateral for a loan) but he cannot unload the car into anyone else, because he does not own it. Simple. The only thing he would eventually be able to settle in court is the fraudulent sale onto him, not the question of reclaming ownership the vehicle (that seems clear IMHO.) If ruling comes in his favour, only then he would be able to reclaim ownership by settling the finance agreement.

Would recommend what you suggest as a kick-start : ask (via Solicitor, so parties see you're not joking) for all documentary evidence on the finance deal, and put some heat on seller. Note also that finance agreements (such as HP, PCP or plain leases) are typically non-transferrable, so the seller cannot use the tagline that he sold the car "under the condition and agreement by the buyer that the finance contract was being transferred onto him."

Seems a clear-cut case, but a battle in court unless you can corner this guy and force him to settle the finance.

Edited for typos.

Edited by Troesma on Thursday 12th July 12:15

Correct, but there may be a simpler route. In the situation I had seen the previous owner was still paying the monthly payments, as is I understand is in this case.

The finance company rang up the previous owner, told him when he was doing was illegal, told him of the consequences, and gave him a 'get-out' of refinancing the amount owing an another loan.

This may of course be secured elsewhere, or not at all, or even for a higher interest rate, which is indeed likely, but the main point is it got the new buyer off the hook.

Which I assume happened because that guy was left with negative equity at the time of sale? Why he did not settle the debt with the sale proceeds and presto? Well, you could argue he invested the money elsewhere at a higher rate than the one on his car finance loan, but...

Of course what you suggest is a simpler line of action, but that would require refinancing of the outstanding debt (to clear the way for the new RK into ownership) but given the circumstances, it is unlikely the financeers will agree to any deal with the seller if there is the smell of fraud in the air... because they are left with a debt hooked to a potentially non-trustworthy client. Risky scenario.

Certainly, it is in their best interest to sort this one out as they have lost some control over the goods, that are now in the posession and care of someone (assuming the buyer is the new RK) they have no contractual relationship with.

Edited by Troesma on Thursday 12th July 13:14