Advice - Buying a car with finance on it...

[AdvocatusD]

I may be close to purchasing a car.

The owner has told me that there is outstanding finance on it. I don't have any experience of dealing with purchasing a car in these circumstances.

I'd be very grateful for some step by step advice and some real world tips.

If I should walk away from a car like this, please do say so!

[DonnyMac]

I'd think the obvious answer would be to have the owner get a settlement figure from the finance house - you pay them directly for their portion and give the difference to the owner?

[Gruber]

It would be preferable for the seller to pay it off before you buy it, but in practice he / she probably needs your cash to do so.

You could pay the finance company direct on the day you collect. So you turn up to collect the car, you and the seller phone the finance co together, get the settlement quote, you give finance co your card details for payment, seller gets (or pays) the balance. Jobs a good'un.

Of course, this assumes there's only one lot of unsettled finance.

[mrmr96]

DonnyMac said:

I'd think the obvious answer would be to have the owner get a settlement figure from the finance house - you pay them directly for their portion and give the difference to the owner?

What if the finance settlement value is more than the car? (I know the seller won't be happy, but how would it work for a buyer?)

[Jimmy No Hands]

Could the buyer not transfer the seller the money, and then have the seller settle the finance while the buyer is present and the finance company can confirm this to them. Can't see it being a problem as long as the buyer can see 100% that the finance is settled.

[Cupramax]

mrmr96 said:

What if the finance settlement value is more than the car?

At that point you walk away and find another thats less hassle to buy.

[craigb84]

DonnyMac said:

I'd think the obvious answer would be to have the owner get a settlement figure from the finance house - you pay them directly for their portion and give the difference to the owner?

I've sold a car this way before. The guy raised two bankers drafts (which i had verified - one for me and one for the finance). We then both went to the post office and he watched me post the letter to the finance house. Money all cleared and I never heard from him again. Easy.

As said above though, if there's negative equity then the seller pays the balance or you walk away.

[r1ch]

Personally i'd walk away to avoid the hassle. I prefer things to be straight forward.

[Jimmy No Hands]

r1ch said:

Personally i'd walk away to avoid the hassle. I prefer things to be straight forward.

A bank transfer and maybe 2 phone calls. Hardly hassle to miss out on a car you might want.

[craigb84]

r1ch said:

Personally i'd walk away to avoid the hassle. I prefer things to be straight forward.

The problem being that apart from the majority of PHer owned cars many across the UK will be finance unless you buy from a dealer.

[snowdude2910]

I'll be selling my car soon with outstanding finance, it is worth slightly more then what I owe so I'll be phoning/have the buyer phone the finance company and pay the balance to them and then the difference to me although some people struggle to get their head around this concept, when I tried to sell it last year I had a buyer and his mum come and see the car fully aware there was finance outstanding and then repeatedly ask me why should they pay my finance off it really isn't a scam a lot of people finance their cars so sales with finance are relatively common although many just part-ex to save the hassle.
If it is worth less then the settlement figure I'd have the seller pay the figure minus what you've agreed to pay and then you just pay the remainder to the finance company.

[monthefish]

Gruber said:

It would be preferable for the seller to pay it off before you buy it, but in practice he / she probably needs your cash to do so.

You could pay the finance company direct on the day you collect. So you turn up to collect the car, you and the seller phone the finance co together, get the settlement quote, you give finance co your card details for payment, seller gets (or pays) the balance. Jobs a good'un.

Of course, this assumes there's only one lot of unsettled finance.

^^^this.
The HPI report should give you the phone number of whoever the outstanding finance is with.
Seller should get the settlement figure in writing from them.

Jimmy No Hands said:

r1ch said:

Personally i'd walk away to avoid the hassle. I prefer things to be straight forward.

A bank transfer and maybe 2 phone calls. Hardly hassle to miss out on a car you might want.

Exactly. There's nothing to it.

[Snowboy]

Much depends on the car the amount and the general shadyness of the person you are purchasing from.

But, a call to the finance company and the HPI people should sort things out.

I’m sure it sounds a bit like a scam if you have never done it before, but it’s quite normal.

[jaedba2604]

I recently bought a car under these circumstances; this would be my advice:

firstly ask the seller how loans are secured on it and whether the o/s finance is greater or less than the value of the car, a lot of people will argue it's none of your business, but if it's none of your business they shouldn't be using your money to settle their fiance.

ask the seller to arrange for a settlement figure to be calculated, and bear in mind that interest often accrues daily so you will have to agree when you're doing the deal; also request the seller asks the finance company to provide verbal and written clarification that the finance is clear (when it is). the seller will also need the account number, sort code and reference number from the finance company.

then phone up HPI and claify that the car has the same number of loans o/s on it that the seller declared, they will also tell you who they are with and what the reference numbers are. tally this with info you've already received.

arrange a day to collect (monday to friday 9-5) and go to the bank with the seller, if the amount you're paying is less than the outstanding finance, you both pay some, if it's more, you pay some to finance, some to him. if you are both paying the finance company both pay by CHAPS (this is important - if he pays with a debit card then it then it'll take 4 days to clear)

phone the finance company (satisfy yourself via google or something that the number you are phoning is bona fide) and ask them to confirm they have received full settlement, and request they clarify this in writing asap.

include a clause in the 'sale invoice' that refers to who you have paid.

phone HPI in a week or so and request document is updated.

as others have stated, if at any point you are wary of the seller i would leg it, another car will come up. the biggest headache i found is the timing of bank transfers, it's the 21st century and yet we still have a sh!tty system.

and don't let the seller call the shots, if they're that fussy, as i said before, they should ask their mum to settle it...

[monthefish]

jaedba2604 said:

stuff

Good post.

jaedba2604 said:

the biggest headache i found is the timing of bank transfers, it's the 21st century and yet we still have a sh!tty system.

On this point, you should aim to be at the bank fairly early on; you don't want to get to the end of the day having not had the confirmation come through yet.

[Jimmy No Hands]

Would a finance company be allowed to settle off two accounts? Say buyer pays X and seller pays X straight after? If that's the case then it really is fairly simple.

(if negative equity)

[AdvocatusD]

jaedba2604 said:

stuff

Thanks a lot. More I think about it, more it seems to be a hassle. I don't think the seller is massively short of the sum he might need to settle, so I'd get him to clear the debt first, update the records, check the HPI and then go ahead.

[jaedba2604]

Jimmy No Hands said:

Would a finance company be allowed to settle off two accounts? Say buyer pays X and seller pays X straight after? If that's the case then it really is fairly simple.

(if negative equity)

the theoretical mechanics are simple yes, but read everything else. buying a car privately is fraught enough anyway.

my contention is why would the seller put themselves in this situation? it's ok being glib about it, but the OP is worried enough to post, going in blase will, 9 times out of 10 be fine, but i'd be dilligent.

i did it, but i was happy that the seller was open enough with me, and it all felt ok.

yeah, get to the bank early enough, if it's a CHAPS transfer it'll be swift, and can't be reneged, don't let the seller fob your off with any saving the cost of the transfer nonsense, it's £23 but that's just another cost of finance to him.

[Jimmy No Hands]

I suspect it happens an awful lot. People get bored of cars, want to downgrade etc. Part ex values are fairly low in comparison to private sales too.

[AdvocatusD]

Tiny bump to say that it looks like it may be happening.

In terms of checks, I suppose HPI will tell you EVERYTHING you need to know re. finance? How many loans, etc? Is that the document you use to check against the information that the seller gives you?