Buying a Used Car that is Already Under Finance... ?

EB# · 14-07-2012, 02:33 PM

Hey forum,
Just wondering what is the correct or best method of purchasing
a used car (from a private seller, NSW or QLD) when the car is already
under finance with money owing ?

- How does one check the exact amount owing and the lender details ?
- Is the cheque payment for the car made out to the finance company ?
- Any other issues or pitfalls?

Thanks.

FPV+fteT3 · 14-07-2012, 02:47 PM

Usually requires 2 cheques assuming the seller is selling the car for more than what he owes. You need to get the seller to ask his finance company for the exact amount payable on a particular day usually a week or 2 after you agree to buy the car. You need to see this amount on the finance company letterhead this will have the contract number on it very important its an official document not some random figure written on a kleenex. You make the cheque out for that amount and you deposit the cheque into their (finance company) account don't rely on the seller to do this. You then pay the current owner the remainder of the agreed price. Prior to handing over any money get a receipt and bill of sale off the current owner and make sure the rego papers are signed. Thats pretty well it.
If you are buying the vehicle through your finance company they can arrange the payout and cheques for you.

The payout of the finance company must be done on the agreed date or before as the payout figure will change it will increase as days pass.
Do the usual revs check to cover all other contingencies and you should be right.

Yellow_Festiva · 14-07-2012, 02:53 PM

Sums it up really.

One guy tried to convince me that all monies goes to him and he sorts out the debt.. yeah right. Don't get burnt buying an encumbered car.. happens more times than it should.

JBomb3000 · 14-07-2012, 03:29 PM

I sold a car that was under finance a few years back and the seller made the entire amount out the the finance company and they refunded me the difference.

FGII-XR6 · 14-07-2012, 03:35 PM

insist on a letter from the finance company saying they have no further interest in the vehicle. they will do this at the time you make the final payment

EB# · 14-07-2012, 09:22 PM

Thanks for the detailed advice.....
Cheers.

cool65 · 14-07-2012, 10:58 PM

As Above

Even if it is family, never leave it to the seller to say just pay me and I will payout the finance figure. You don't want car repossessed and still have to pay your loan.

SSVPom · 15-07-2012, 10:22 AM

I wasn't quite sure myself when selling my Sportwagon last year.. I advertised the car for a few K more than I had owing, and told the chap who bought it I needed to clear $36k, and we settled on $37k. He never asked to see my payout figure or paperwork, in fact didn't seem too fussed about the situation at all !

He payed a cash deposit and personal cheque for the balance which I took to my bank and waited for it to clear, before transferring the $36k to my finance company. I organized the RWC in the meantime.

All went well, his money cleared, my bank transferred the money quickly to the finance company, he waited until RWC was complete and everything cleared, then came around and collected the car.

Thinking back, he was too trusting really but I had nothing to hide, and the car was in perfect condition. I could have shown him the paperwork from the finance company, but there you go.

jpd80 · 15-07-2012, 10:30 AM

One thing,
you need to have the finance company remove the vehicle from the encumbered list,
My wife tried to sell her car a few years back, we had paid it out years before but the
finance company didn't do the final step and remove it from the list.

Morexbs · 15-07-2012, 01:59 PM

Buyer beware because you are in dangerous waters.I have seen people amend the payout figures on letters from finance companies to a lower amount and then re-copy the letter so that it appears to have been faxed.
The finance company won't tell you anything or communicate with you in any way due to privacy laws so you are basically taking the seller at their word.If the car is sold for less than what is owed on it,some finance companies will remove the encumbrance and let the old owner keep paying the loan as long as the entire sale proceeds are put on the loan when he sells the car.I wouldn't touch it.

H.G · 15-07-2012, 02:09 PM

walk away just walk away..

Yellow_Festiva · 15-07-2012, 02:28 PM

Quote:

Originally Posted by Morexbs

Buyer beware because you are in dangerous waters.I have seen people amend the payout figures on letters from finance companies to a lower amount and then re-copy the letter so that it appears to have been faxed.
The finance company won't tell you anything or communicate with you in any way due to privacy laws so you are basically taking the seller at their word.If the car is sold for less than what is owed on it,some finance companies will remove the encumbrance and let the old owner keep paying the loan as long as the entire sale proceeds are put on the loan when he sells the car.I wouldn't touch it.

That whole privacy thing can be a pain. When I was selling an encumbered car on behalf of a housemate we had an arrangement with a specific person at the loan office. I could talk to him, and get any details of loan I needed, and in turn I gave him permission to help out and answer any questions potential buyers have.

Any seller of an encumbered vehicle should do the same. If they don't and insist that everything is done by / through them then they are sus.

I would never accept paperwork handed to me from the loan company via the seller... some creative computer work / photocopying can re-word it easily. Either I call and talk to a person at the loan place direct, and recieve paperwork to my fax direct of the deal is off.

You don't need to avoid buying an encumbered car like the plague, just be smart about it to cover yourself.