Buying a car that's already on finance?

[Jim1556]

Hi all, something I've never done before so just seeking clarification from you knowledgeable types.

I'm a cash buyer, potentially interested in a car (997.2 C2S) that shows outstanding finance on the HPI check - confirmed through the dealer (SOR).

How is this cleared? I buy the car, finance is paid off, but will take a few days to clear from the car? Technically, I'd be buying the car with a promise that the finance will be settled - is there a way to get legal protection? EG: If the seller did a bunk with the money, would I be liable for the finance? I'm sure it's all above board, but as said, never done it before...

What say you? Thanks in advance!

[SV_WDC]

https://www.autotrader.co.uk/content/advice/should...

Plenty of advice here. But in short, make sure the finance is cleared (& seek confirmation) before you purchase the vehicle & transfer the ownership

[anyoldcardave]

In plain English, whatever you do, do not give cash to the seller in the hope they will settle finance, same as others said,

[Koln-RS]

CheesecakeRunner said:

You pay the finance company directly to settle the finance.

No.
It must be cleared first by the seller/debtor

[anyoldcardave]

Koln-RS said:

No.
It must be cleared first by the seller/debtor

The debtor is the only one that can request a settlement figure, who actually pays it does not matter at all, as long as they get paid.

[Slippydiff]

anyoldcardave said:

The debtor is the only one that can request a settlement figure, who actually pays it does not matter at all, as long as they get paid.

^ This. Though in an ideal world the vendor would pay off the outstanding finance on the vehicle. After which the finance company will send them confirmation by email that they no longer have any interest in the vehicle. Until you receive this confirmation, do not pay ANY monies to the vendor.

[AAAndy]

At the risk of duplicating some of what has already been said. Do not part with any of your cash to the seller / dealer until you have evidence that the finance has been fully settled, and that the company who financed the car no longer has an interest in the car. They must use their money to settle any outstanding before you can safely purchase it.

I am not an expert in these things, but there are lots of unscrumpulous people out there so just be careful.

I don't believe that you would owe the finance company money (that contract remains against the original borrower), but they retain what is called an 'interest' in the car, where any oustanding money is claimable by them against the asset. They can chase the original borrower for the money, but if they go missing with your money, worse case the finance company will come and take your car as they technically own it/part of it.

If it smells too fishy, walk away and find another one.

[anyoldcardave]

Slippydiff said:

anyoldcardave said:

The debtor is the only one that can request a settlement figure, who actually pays it does not matter at all, as long as they get paid.

^ This. Though in an ideal world the vendor would pay off the outstanding finance on the vehicle. After which the finance company will send them confirmation by email that they no longer have any interest in the vehicle. Until you receive this confirmation, do not pay ANY monies to the vendor.

Make sure the keys and v5 are in your possession too

To be fair, if the OP was told by the seller there is finance, and not through a car check and then finding out, then the seller is probably a straight up person.

Every deal requires a certain amount of trust from both sides.

[Jim1556]

PH strikes again. Many thanks all for your help!

[Mankers]

CheesecakeRunner said:

anyoldcardave said:

Koln-RS said:

No.
It must be cleared first by the seller/debtor

The debtor is the only one that can request a settlement figure, who actually pays it does not matter at all, as long as they get paid.

Exactly. I posted that because I’ve done it myself, both as seller and as purchaser.

Seller rings finance company, “I’d like to settle my account please”. “Certainly Sir, it’s £xxxx”. “Thank you, here’s Joe Bloggs with payment details”… and pass the phone to the purchaser.

Any difference between price and finance, you deal with as you would normally.

I’ve been in this position as a buyer, I even called the sellers finance company, they confirmed outstanding finance amount. I told them I was buying the car and seller would call them, pass security, hand phone to me so I could settle the finance, all good. Well it didn’t pan out like that on the day. Car purchase was c.£100k private sale. Seller called finance company, but finance co refused to accept the payment from me! It had to come directly from the borrower! Think is was Santander finance from memory.

[911hope]

Situation is as follows...

Person A. has finance deal with lender. Anyone pays off settlement figure..car ownership passes to person A.

If you the would be buyer pays that finance off, all you have done is pay off person A's debts. You are now hoping they will keep their word and sell you the car.

Without a contract to sell you the car, you have no comeback.

Lots of people will write on here they have done this lots, but it is not a safeguard.

It is not your responsibility to pay off someone's debt. It is their problem. Don't make it yours.

[anyoldcardave]

Mankers said:

CheesecakeRunner said:

anyoldcardave said:

Koln-RS said:

No.
It must be cleared first by the seller/debtor

The debtor is the only one that can request a settlement figure, who actually pays it does not matter at all, as long as they get paid.

Exactly. I posted that because I’ve done it myself, both as seller and as purchaser.

Seller rings finance company, “I’d like to settle my account please”. “Certainly Sir, it’s £xxxx”. “Thank you, here’s Joe Bloggs with payment details”… and pass the phone to the purchaser.

Any difference between price and finance, you deal with as you would normally.

I’ve been in this position as a buyer, I even called the sellers finance company, they confirmed outstanding finance amount. I told them I was buying the car and seller would call them, pass security, hand phone to me so I could settle the finance, all good. Well it didn’t pan out like that on the day. Car purchase was c.£100k private sale. Seller called finance company, but finance co refused to accept the payment from me! It had to come directly from the borrower! Think is was Santander finance from memory.

Probably because whoever gave YOU that information was in breach of data protection, someone clocked it, and they wanted nothing to do with you.

That should never happen, the seller should have spoken to them first, informed them what is going on, and they would accept the payment from you.

How do you think WBAC di it? Give the poor skint seller a wad of cash into their account ?

As I said earlier, trust is part of any deal, your mistrust caused the issue you had, due dilligence would have told you the car had outstanding finance, the seller obviously already had, so why the need to call them ?

[FrancisA]

Jim1556 said:

Hi all, something I've never done before so just seeking clarification from you knowledgeable types.

I'm a cash buyer, potentially interested in a car (997.2 C2S) that shows outstanding finance on the HPI check - confirmed through the dealer (SOR).

How is this cleared? I buy the car, finance is paid off, but will take a few days to clear from the car? Technically, I'd be buying the car with a promise that the finance will be settled - is there a way to get legal protection? EG: If the seller did a bunk with the money, would I be liable for the finance? I'm sure it's all above board, but as said, never done it before...

What say you? Thanks in advance!

Benn in exactly the same position. In 2008 I flew down to Glasgow to pick up a 500 CLS. Lovely car at the time. I ran my own independent HPI check and there was outstanding finance. Not that unusual as the dealer is holding out till the car is sold. I asked them for an indemnity agreement in the event that the finance company came knocking. I do have a legal background but stopped practising some 15 years earlier. That notwithstanding I semi dictated the letter and had them sign it. That way I was fully covered.

[I 8 a 4RE]

It is surprising nobody has intermediated / created an escrow service for this process yet.

It is fraught with risk for Joe Public.

Imagine you Just paid off someone’s car finance … runs off with car, keys and V5.

[Pent]

It’s more and more common to me

I sold my motorbike with finance. The guy turned up, rang the finance company there and then, he paid the settlement which was technically under market value for the bike, got an email straight away.

He rode off into the sunset.

I don’t see any issues personally

[911hope]

I 8 a 4RE said:

It is surprising nobody has intermediated / created an escrow service for this process yet.

It is fraught with risk for Joe Public.

Imagine you Just paid off someone’s car finance … runs off with car, keys and V5.

That is the risk. The fact that many have taken the risk and got away with it does not reduce the risk.

[c3m]

I bought my GTS 4.0 from the OPC and on the day of collection, it still had finance on it. They explained they clear it once sold and it takes a few days.

Wouldn't bother me buying from an OPC who have been around for a long time, I'm sure they will clear it afterwards.

From a private buyer, I would never, ever buy a car which is showing finance.

[I 8 a 4RE]

911hope said:

That is the risk. The fact that many have taken the risk and got away with it does not reduce the risk.

I agree. On a £50k car purchase surely people would pay for a £100? £200? £500? escrow service to ensure the money is safe?