Buying privately, when the car still has finance outstanding
Discussion
I recently saw a car on ebay, with the following comment, on paying off the outstanding finance on an expensive car..
This seems to put the buyer at huge risk, paying the finance house. What stops the seller from saying thank "you for paying off my finance, goodbye"
Is this standard practice? Is this dodgy?
"The car currently has approx £84,000 of finance which will be settled from the proceeds of sale, this can all be done on day of collection. I'll get a redemption figure from VWFS we will settle the finance and get confirmation from VWFS, balance will be paid to me, I'll sign over all paper work and V5 once payment has cleared. "
This seems to put the buyer at huge risk, paying the finance house. What stops the seller from saying thank "you for paying off my finance, goodbye"
Is this standard practice? Is this dodgy?
"The car currently has approx £84,000 of finance which will be settled from the proceeds of sale, this can all be done on day of collection. I'll get a redemption figure from VWFS we will settle the finance and get confirmation from VWFS, balance will be paid to me, I'll sign over all paper work and V5 once payment has cleared. "
Tom8 said:
I bought a car privately like this. Not quite the same amount of cash but we did go through. He paid off finance and I paid him. You are legally not allowed do pay the finance company. He did his transfer then I did mine knowing the amount plus the equity would clear with his bank.
That’s inaccurate and bad advice. The vendor can give authorisation for a buyer to speak and pay them directly.You draw up a sales agreement with the buyer to pay x to the finance company (matching the figures on a settlement letter) and any balance to the vendor.
Unless the vendor has cash to clear finance in advance then shouldn’t ever pay all to the vendor, as they may not clear finance and or as it can take 3-5 days to show the finance has been settled.
[quote=__]
That’s inaccurate and bad advice. The vendor can give authorisation for a buyer to speak and pay them directly.
You draw up a sales agreement with the buyer to pay x to the finance company (matching the figures on a settlement letter) and any balance to the vendor.
Unless the vendor has cash to clear finance in advance then shouldn’t ever pay all to the vendor, as they may not clear finance and or as it can take 3-5 days to show the finance has been settled.
[/quote]
This. Pay finance company direct while there and get confirmation cleared, and balance to the owner, then drive away in the car. Enjoy!
PS just use due diligence to check you are actually speaking to and paying off the finance company, not one of his mates
That’s inaccurate and bad advice. The vendor can give authorisation for a buyer to speak and pay them directly.
You draw up a sales agreement with the buyer to pay x to the finance company (matching the figures on a settlement letter) and any balance to the vendor.
Unless the vendor has cash to clear finance in advance then shouldn’t ever pay all to the vendor, as they may not clear finance and or as it can take 3-5 days to show the finance has been settled.
[/quote]
This. Pay finance company direct while there and get confirmation cleared, and balance to the owner, then drive away in the car. Enjoy!
PS just use due diligence to check you are actually speaking to and paying off the finance company, not one of his mates
ZX10R NIN said:
Get the seller to give you authorisation to speak to the finance company pay them, at which point they'll send a conformation Email saying that they no longer have an interest in the vehicle (it may take up to an hour to get it all done) at that point pay the vendor.
That assumes the vendor has the cash to settle the finance.ZX10R NIN said:
Get the seller to give you authorisation to speak to the finance company pay them, at which point they'll send a conformation Email saying that they no longer have an interest in the vehicle (it may take up to an hour to get it all done) at that point pay the vendor.
Quite a few finance houses will only take payment from the account holdernick1871 said:
Standard practice.
Been on both sides of this before, buying and selling.
Yes, someone could in theory refuse to sell you the car after you have sat at their kitchen table and paid their finance off but in reality, no, this isn’t going to happen.
So what would be the protection if the buyer did walk away after you paid off their finance?Been on both sides of this before, buying and selling.
Yes, someone could in theory refuse to sell you the car after you have sat at their kitchen table and paid their finance off but in reality, no, this isn’t going to happen.
Only one on here person has mentioned signing a purchase agreement first. That at least would give you something to enforce through the courts.
Edited by 911hope on Saturday 17th December 11:12
piker said:
Done this many times as a seller no complications whatsoever.
Whenever a potential buyer responded to my ad normally in AT, I would make it clear right from the start that finance is outstanding so we both know where we stand moving forward etc.
I have always used Toyota finance.
There are no risks from the seller perspective, though.Whenever a potential buyer responded to my ad normally in AT, I would make it clear right from the start that finance is outstanding so we both know where we stand moving forward etc.
I have always used Toyota finance.
The question is about the risk to the buyer.
It seems many people don't give it any consideration.
911hope said:
There are no risks from the seller perspective, though.
The question is about the risk to the buyer.
It seems many people don't give it any consideration.
There are risks to all parties.The question is about the risk to the buyer.
It seems many people don't give it any consideration.
If the buyer doesn’t pay or emulates payment, or has a payment recalled then the vendor remains on the hook to the finance company.
There’s limited if any risk to the buyer if they have a settlement letter, validate with the finance company, pay directly using confirmed bank transfer, whilst only transferring any balance to the vendor.
[quote=__]
If the buyer doesn’t pay or emulates payment, or has a payment recalled then the vendor remains on the hook to the finance company.
There’s limited if any risk to the buyer if they have a settlement letter, validate with the finance company, pay directly using confirmed bank transfer, whilst only transferring any balance to the vendor.
The seller gets his finance paid off and it is confirmed by the finance house. Payment cannot be undone . Where is his risk?911hope said:
There are no risks from the seller perspective, though.
The question is about the risk to the buyer.
It seems many people don't give it any consideration.
There are risks to all parties.The question is about the risk to the buyer.
It seems many people don't give it any consideration.
If the buyer doesn’t pay or emulates payment, or has a payment recalled then the vendor remains on the hook to the finance company.
There’s limited if any risk to the buyer if they have a settlement letter, validate with the finance company, pay directly using confirmed bank transfer, whilst only transferring any balance to the vendor.
Once finance is paid off the car still belongs to their customer (seller). Buyer is now at risk. If the seller is a crook, it can go very wrong.
911hope said:
piker said:
Done this many times as a seller no complications whatsoever.
Whenever a potential buyer responded to my ad normally in AT, I would make it clear right from the start that finance is outstanding so we both know where we stand moving forward etc.
I have always used Toyota finance.
There are no risks from the seller perspective, though.Whenever a potential buyer responded to my ad normally in AT, I would make it clear right from the start that finance is outstanding so we both know where we stand moving forward etc.
I have always used Toyota finance.
The question is about the risk to the buyer.
It seems many people don't give it any consideration.
At some point you transfer / hand over your money and for a period of time the seller has your money and their car.
Like all car buying transactions i'd be making sure i did the paying for the car in their home and at the address registered on the V5C.
The other thing to consider is how quickly you want to do the deal. I bought my Elise privately and it had finance on it when I looked at it which the seller genuinely forgot to mention and only flagged when I did an HPI. He then paid it off, I waited for the finance company to confirm this and the HPI report then showed it as clear. I then paid cash to the seller the following weekend having left a small deposit.
I'd do it this way again but not settle the finance for the seller.
I'd do it this way again but not settle the finance for the seller.
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