correct way to buy a car with finance on it

[weg]

I'm considering buying a car privately which has finance on it and the guy needs my cash to discharge the loan.

I'm getting a great deal partly because the car market here is stuffed and partly I think because of this reason.

For those who know the pitfalls can you tell me if this is right?

I go with the guy to the ANZ where he discharges the loan with my cash - I get a copy of the discharge reciept - I then pay him the balance and get him to transfer the vehicle over to me. He suggested we go to the bank together.

Will do a final securities check prior to going though this - have already done one and it confirms what he told me.

It's the first time I've been in this situation and am wondering if i have covered myself or not?

 

[Ideo]

2 cheques. One to the loan company for the loan amount. The other to the owner for the amount left over.

Both bought and sold cars that way.

 

[datto]

I'd get the seller to sign the car over prior to making any payment to ANZ.

Just my opinion. I mean the seller could just not proceed with the transfer after you pay the bank. Hey, thanks for paying my car off, see ya.

Or maybe you could draw up some kind of contract.

 

[weg]

2 cheques. One to the loan company for the loan amount. The other to the owner for the amount left over.

Both bought and sold cars that way.

That's pretty much what i planned but thought I'd do cash as he didn't know the exact payout figure.

So no real chance of anything going wrong I take it if done this way?

 

[weg]

I'd get the seller to sign the car over prior to making any payment to ANZ.

Just my opinion. I mean the seller could just not proceed with the transfer after you pay the bank. Hey, thanks for paying my car off, see ya.

Or maybe you could draw up some kind of contract.

Just read that after my last post.

Good idea. I'll put that to him - that we do the t/f, he gets his cash and then we do the finance in that order.

 

[Aaron_C]

...and make sure you buy the car in a company name NOT a personal name for GST/depreciation reasons.

 

[Pa1nter]

I would be dealing with the finance company myself,making sure you have the right figures and use two bank cheques (Not cash) this gives you the most protection,
You can ring them,explain the situation and they will talk to you,I have done it twice in as many years.

 

[Ideo]

That's pretty much what i planned but thought I'd do cash as he didn't know the exact payout figure.

So no real chance of anything going wrong I take it if done this way?

Talk with the finance company as soon as you transfer the money and deal with the finance company yourself. Do not rely on him.

He should be able to provide the exact payout figure. It only takes one phone call to get it.

 

[weg]

Dealing with the finance company directly is what i had in mind originally but thought they would probably not want to deal with me.

I raised this and the seller said he would give them authority to speak however if this is what I wanted.

He did not have the exact payout figure but I don't think him getting it would be a problem, so bank checks it is I think.

 

[Ideo]

Dealing with the finance company directly is what i had in mind originally but thought they would probably not want to deal with me.

I raised this and the seller said he would give them authority to speak however if this is what I wanted.

He did not have the exact payout figure but I don't think him getting it would be a problem, so bank checks it is I think.

Yep, excellent approach.

An idiot friend of mine trusted a seller to pay the outstanding loan so just gave him the cheque. Yeah. That took a while to clean up.

 

[MRO]

I take two bank cheques. One for seller and one for finance company. I drive with the seller to the bank/finance company and hand over the cheque together. Might not always be possible depending on financier. It is one of only a few ways to ensure that payment to finance company is ever made and you get clear title.

 

[Jake D]

I didn't even know this was a thing. Fill out the transfer forms, hand him cash, let him deal with the fact that he got stung by a shitty finance company.

 

[MTR]

Sorry, had to post this Aussie ripper of a movie, this guy got stitched up by dodgy car dealer, a must watch, not sure whether it will help when buying though.

http://www.youtube.com/watch?v=6viyAC6GuFY

 

[robbiejuve]

I didn't even know this was a thing. Fill out the transfer forms, hand him cash, let him deal with the fact that he got stung by a shitty finance company.

Finance company has a charge over the car, not over the person so if you sell an encumbered vehicle finance company will just repo it from the person you sold it to.

OP I did the exact same thing as you. Went to the bank, had him deposit funds into the account and got a letter saying it was discharged.

The guy I bought my car from didnt tell me about the finance company, he was talking about using the money to go backpacking blah blah, I did a REVs check as you should do and saw it was encumbered.

He wasnt too happy when I told him because the sale price of the car was less than the loan so he had to pay off the balance, guess no backpacking for him.

Hope he learnt that 20 year olds on crappy income should not be buying 50k cars on finance.

 

[Ideo]

Finance company has a charge over the car, not over the person so if you sell an encumbered vehicle finance company will just repo it from the person you sold it to.

OP I did the exact same thing as you. Went to the bank, had him deposit funds into the account and got a letter saying it was discharged.

The guy I bought my car from didnt tell me about the finance company, he was talking about using the money to go backpacking blah blah, I did a REVs check as you should do and saw it was encumbered.

He wasnt too happy when I told him because the sale price of the car was less than the loan so he had to pay off the balance, guess no backpacking for him.

Hope he learnt that 20 year olds on crappy income should not be buying 50k cars on finance.

Yep.

It's nothing to do with helping out the person you are buying from. It's about protecting yourself.

 

[BMW]

I didn't even know this was a thing. Fill out the transfer forms, hand him cash, let him deal with the fact that he got stung by a shitty finance company.

I rekon they're would be a few people all too happy to sell you a car

 

[investor2009]

Theres a correct way to finance a car!?

 

[Ideo]

Theres a correct way to finance a car!?

Yep. For certain business purchases yes.

Also if you are smart about it then it can work out ok. A friend just bought a new car in EOFY sales for a 0.9% comparison rate, free servicing for 3 years and at 4.5k below list. I think that makes a lot more money than them spending half that amount in cash for a second hand car.

 

[Jake D]

I rekon they're would be a few people all too happy to sell you a car

Then they're barking up the wrong tree. I've been car-free for months now.

(I hope this same scam doesn't work for pushbikes...)