selling a car privately with finance outstanding

richard plumb

Distinguished Member
Hi,

Presumably its not allowed. So whats the recommended approach? Short term loan to settle the finance, paid off when the car is sold?

I'm (rather foolishly probably) contemplating chipping in my Z4 for a more sensible 3 series coupe, but the BMW trade-in will just about clear the finance and not give me any deposit. If I sell it privately I should be able to get more for it, possibly enough to cover the deposit as well. But settling the finance may be an issue.
 

lord-dudester

Well-known Member
hi richard.

I've sold two cars with finance tied to them to private buyers. I've always been super honest with buyer, advising the finance agreement is in place and I've provided a hpi with the car before showing the outstanding finance and then I've sent the buyer a confirmation that I've paid it off straight away after. once was via another hpi, the later was via a confirmation letter from the lender

my last sale the buyer and i drew up a small agreement between us and both signed it and they seemed happy to do it that way. it just stated that i'd settle the outstanding balance within 7 days of the transfer of ownership.

I've never told the banks, and yeah i know you should, but the banks? do we really need to be nice to them? :D

I've done this because of trade in values too. my last sale was a focus ST and the dealers offered me £1500 less than i sold it for privately.
 

paulyoung666

Distinguished Member
hi richard.

I've sold two cars with finance tied to them to private buyers. I've always been super honest with buyer, advising the finance agreement is in place and I've provided a hpi with the car before showing the outstanding finance and then I've sent the buyer a confirmation that I've paid it off straight away after. once was via another hpi, the later was via a confirmation letter from the lender

my last sale the buyer and i drew up a small agreement between us and both signed it and they seemed happy to do it that way. it just stated that i'd settle the outstanding balance within 7 days of the transfer of ownership.

I've never told the banks, and yeah i know you should, but the banks? do we really need to be nice to them? :D

I've done this because of trade in values too. my last sale was a focus ST and the dealers offered me £1500 less than i sold it for privately.

you must have come across 2 very gullible buyers then , would you buy a car that you did not have the title for .....
 

RobM

Distinguished Member
I've helped a mate sell a car with outstanding finance, no trouble at all so long as you're honest. The buyer wanted to pay the money owed to the finance company directly with the rest coming to my mate, which we did over the phone no trouble at all.

Just be honest, it might put some people off, but not everyone. Have a word with your finance company first though, get their advice on the options available to you to settle quickly.
 
If I could pay direct to the finance company and partially to the seller I wouldn't mind. But as lord-dudester is explaining an experience, no way I would get involved in a deal of such kind.
 

sean5302

Banned
you must have come across 2 very gullible buyers then , would you buy a car that you did not have the title for .....

This is not true.

The only circumstances in which you would not have clear title would be if the vehicle was stolen.
If you buy where someone else has finance outstanding the debt is against the seller. The financer can not repossess or take action against you, without a court order.
The action would be in the county court and judges invariably decide against the seller. I have never known a case go against a buyer.
Bailiffs tend to "bluff and bluster". They try and force buyers to give up the vehicles even though there is no legal lien here.
 
Hmmm doesn't it depend on how the vehicle is financed as well. Not all finance methods do give you the title. Anyway in a buyers market, you have choice of two, one has finance outstanding the other hasn't, which would you pick?
 

sean5302

Banned
Never that simple, is it?
One will be in a colour you like, will be in slightly better condition or will just appeal more.
More than 99% of people are decent, honest folk. The OP just wants advice on selling his car with some outstanding finance, as many sellers do.
Provided that he settles the finance there should never be a problem.
 
OK, the point I was making, pay it off first then sell it as it will enlarge the market to sell to the people you'll alienate when finance is still outstanding.
 

Desmo

Distinguished Member
Assuming he can afford to. Obviously I don't know the figures involved but he's said the trade in only just clears off the finance so I'd assume he's talking quite a large sum of money.
 

RobM

Distinguished Member
OK, the point I was making, pay it off first then sell it as it will enlarge the market to sell to the people you'll alienate when finance is still outstanding.

If the OP was in a position to pay it off entirely first, I'm pretty sure outstanding finance wouldn't be an issue :)
 

Desmo

Distinguished Member
Ah yeah, forgot that bit. If its not too much hassle to sort the loan short term then it does widen your buyers market somewhat.
 

dereks

Active Member
As above I've sold a car buyer paid the finance company direct and the rest to me no probs at all
 

markymark34

Well-known Member
Ive bought over 30 cars and i wouldnt touch one with finance on it accepting the seller would pay it off, for me there are loads of other cars out there and id rather not have the hassle. The only way i would do it is the way mentioned here. If i the buyer can pay the finance off and the rest to the seller.

I usually find that bank loans are cheaper than loans from a car dealer anyway so my loans are usually personal ones and not linked to a car so it doesnt matter when/how i sell it. Certainly saves a lot of hassle.

Mark
 

FZR400RRSP

Banned
I usually find that bank loans are cheaper than loans from a car dealer anyway so my loans are usually personal ones and not linked to a car so it doesnt matter when/how i sell it.

This is how we always finance car purchases too.
Personal loan, you could be spending it on sweeties as far as the bank is concerned.
When I say 'bank', it's rarely a high stree bank.
We just go for whoever is offering the lowest APR at that time.
We have excellent credit history, so we always get the best rates.
 

richard plumb

Distinguished Member
This is how we always finance car purchases too.
Personal loan, you could be spending it on sweeties as far as the bank is concerned.
When I say 'bank', it's rarely a high stree bank.
We just go for whoever is offering the lowest APR at that time.
We have excellent credit history, so we always get the best rates.

sure, but in the current climate, loans for higher amounts (>15k) are not at cheap interest rates, they escalate pretty quickly, even for good credit ratings.


BTW, how do PCP type deals usually track depreciation? Lets say the dealer will offer exactly the same for trade-in as my settlement figure today. Generally speaking, in 12 months time will the trade-in be slightly more than the settlement, or slightly less? I.e should I have any expectation to get anything out of this deal, or is break-even the best I'll get before the term is up?
 

Ayub

Distinguished Member
I've helped a mate sell a car with outstanding finance, no trouble at all so long as you're honest. The buyer wanted to pay the money owed to the finance company directly with the rest coming to my mate, which we did over the phone no trouble at all.

Interesting, i never thought of that. Thank you
 

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