Informal ‘finance’ agreement question
Discussion
Good morning all,
I’m a trainee driving instructor and recently bought my car off a fellow ADI. I drew up an agreement which covered the monthly payment but did not say that title would remain with the seller until all payments were made. The seller happily signed this.
I’m now wondering whether being an ADI is for me. I could just return the car to my colleague but then trying to get a new job without a car would be very difficult. I’m aware of the moral elements of this and am not after advice on that front. But would it be legal for me to sell the car, buy myself a far cheaper car, give the balance to my colleague and then continue the monthly payments until the rest of the debt is cleared?
Thank you in advance for your help :-)
I’m a trainee driving instructor and recently bought my car off a fellow ADI. I drew up an agreement which covered the monthly payment but did not say that title would remain with the seller until all payments were made. The seller happily signed this.
I’m now wondering whether being an ADI is for me. I could just return the car to my colleague but then trying to get a new job without a car would be very difficult. I’m aware of the moral elements of this and am not after advice on that front. But would it be legal for me to sell the car, buy myself a far cheaper car, give the balance to my colleague and then continue the monthly payments until the rest of the debt is cleared?
Thank you in advance for your help :-)
BobTheEvilPenguin said:
I appreciate that that is the law for formal finance agreements made with banks or finance companies. However, this is an informal agreement between two people and as such will not be recorded.
But you have said you are paying him money which ‘covered the monthly payment’ which means he has finance on the car? No?boyse7en said:
If I'm reading this right, you've agreed to buy a car from a colleague and to pay for it monthly but now want to stop paying for the car and to keep it?
That's theft, whether you have got the V5 in your name or not
You haven’t read it right. Please go back and read it again, more carefully. That's theft, whether you have got the V5 in your name or not
BobTheEvilPenguin said:
That’s the rub. The V5 is in my name, which I know does not prove ownership. The agreement I drew up states that the car is sold to me. There is no mention in it of ownership remaining with the seller until the balance is cleared.
Obviously, you’re going to keep paying him as per your agreement but there is no issue as to whether you sell the car or keep it as I suspect your agreement doesn’t state that the car is acting as collateral in the agreement?The easiest thing to be doing is to talk it over with him. He might even want the car back or know someone else who would buy it off you. You could also arrange to give him the funds upon sale and make up any shortfall on a fair monthly basis along the lines of the current agreed amount etc.
If you’re wanting to sell the car and pocket the lump sum and continue with the monthly repayments then your agreement may well not specify whether this is allowable or not. Reading between the lines of your ‘agreement’ it’s probably perfectly allowable but it would be manifestly poor form and only a proper turd of eminent travellerness would have such a thing pop into their flawed, broken and mostly empty mind.
He didn’t enter into the agreement to fund your purchase of a normal car, or just part of it so it would be better to keep to the ‘spirit’ of the agreement and get yourself a grown up’s loan for the car you need and try to forget you ever contemplated a life of tarmacing driveways really badly.
Edited by DonkeyApple on Wednesday 9th May 14:10
Hmmmm, “flawed, broken and mostly empty” is a worryingly accurate description of my mind.
However, I’d never trouser the whole proceeds from selling the car. Hypothetically, the car is worth £10.5k. So I’d buy something for £3k-ish then give him the rest, making up the shortfall by continuing payments to him.
However, I’d never trouser the whole proceeds from selling the car. Hypothetically, the car is worth £10.5k. So I’d buy something for £3k-ish then give him the rest, making up the shortfall by continuing payments to him.
BobTheEvilPenguin said:
Hmmmm, “flawed, broken and mostly empty” is a worryingly accurate description of my mind.
However, I’d never trouser the whole proceeds from selling the car. Hypothetically, the car is worth £10.5k. So I’d buy something for £3k-ish then give him the rest, making up the shortfall by continuing payments to him.
Firstly, it probably describes most of our minds. It’s our position on the scale that’s important. However, I’d never trouser the whole proceeds from selling the car. Hypothetically, the car is worth £10.5k. So I’d buy something for £3k-ish then give him the rest, making up the shortfall by continuing payments to him.
Commercially your idea makes perfect sense but (added above in an edit) it doesn’t really sit within the spirit of the agreement. Which is probably why you are questioning the idea anyway.
Get a proper loan for the balance rather than taking the piss out of someone’s trust etc.
BobTheEvilPenguin said:
That’s the rub. The V5 is in my name, which I know does not prove ownership. The agreement I drew up states that the car is sold to me. There is no mention in it of ownership remaining with the seller until the balance is cleared.
Answer the question - who legally OWNS the car.A V5 is not a proof of ownership document. All it shows is who's the "Registered Keeper" - which is not the same thing.
Person A owns a car outright.
He agrees that person B can use the car for a monthly fee.
Has Person A sold the car to Person B or is Person B just renting it from Person A.
How clear was the agreement? Does it actually say something along the lines of "I hereby sell this vehicle to Person B with effect from this date for the sum of £X,XXX. Settlement of the amount due will be by X Number of monthly instalments of £X each "?
In my opinion you don't own the car as you haven't paid for it yet in full. Therefore you shouldn't try and sell it, unless you have the agreement of the owner.
Whilst the arrangement is somewhat informal, if it came down to it and he took you to court, I believe you would lose. After all, just because your document doesn't include a specific clause relating to when title passes to the new owner, it doesn't mean that a judge can't review the situation and decide what is normal/reasonable.
And in general when you agree to pay for something in stages, you only own it when you have completed all of the payments.
As DA says, you should discuss with the owner and get a loan and repay the outstanding amount in full. Then you can do whatever you want with it.
Whilst the arrangement is somewhat informal, if it came down to it and he took you to court, I believe you would lose. After all, just because your document doesn't include a specific clause relating to when title passes to the new owner, it doesn't mean that a judge can't review the situation and decide what is normal/reasonable.
And in general when you agree to pay for something in stages, you only own it when you have completed all of the payments.
As DA says, you should discuss with the owner and get a loan and repay the outstanding amount in full. Then you can do whatever you want with it.
Eric Mc said:
Answer the question - who legally OWNS the car.
That was kind of the reason for posting in the first place. I was evidently unsure. Eric Mc said:
A V5 is not a proof of ownership document. All it shows is who's the "Registered Keeper" - which is not the same thing.
Ummmm, yes. I know. That’s pretty much what I wrote. Eric Mc said:
How clear was the agreement? Does it actually say something along the lines of "I hereby sell this vehicle to Person B with effect from this date for the sum of £X,XXX. Settlement of the amount due will be by X Number of monthly instalments of £X each "?
Yes. Almost exactly. Are you paying interest on the loan? If so, it isn't as simple as just paying the balance (e.g. the loan was £10,500 and you've already paid £500 - the amount outstanding ISN'T £10,000).
It appears you own the car - you can't force him to have ownership transferred to him as a way of settling the debt.
As it appears you own the car you are free to sell it. Ask the lender how much you owe him to pay off the loan and go from there. That seems the only logical solution.
It appears you own the car - you can't force him to have ownership transferred to him as a way of settling the debt.
As it appears you own the car you are free to sell it. Ask the lender how much you owe him to pay off the loan and go from there. That seems the only logical solution.
Roman Rhodes said:
Are you paying interest on the loan? If so, it isn't as simple as just paying the balance (e.g. the loan was £10,500 and you've already paid £500 - the amount outstanding ISN'T £10,000).
It appears you own the car - you can't force him to have ownership transferred to him as a way of settling the debt.
As it appears you own the car you are free to sell it. Ask the lender how much you owe him to pay off the loan and go from there. That seems the only logical solution.
If the OP sells the car, the lender has lost access to the collateral should the OP default on any remaining payments (e.g. due to ill health resulting in loss of income). As you say, explaining the situation to the lender, offering a number of options and inviting further suggestions from him would be the fairest way to proceed.It appears you own the car - you can't force him to have ownership transferred to him as a way of settling the debt.
As it appears you own the car you are free to sell it. Ask the lender how much you owe him to pay off the loan and go from there. That seems the only logical solution.
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