I’m buying a used car from a private party (e.g., on craigslist). The Seller’s car is owned (i.e., as represented by the title) by the finance company (e.g,. Honda Financial). The Seller does not have enough money (without my money) to pay off the car first, then sell it to me. Thus, it seems like I’m really buying the car from the finance company. What are the steps to make this happen. Obviously, I can’t pay the Seller to use my money to pay off the finance company because I’m at significant risk that the Seller can take my money to the casino, then I’ll be stuck with a car to be re-possessed by the finance company when bills aren’t being paid. I’ve read that Seller and Buyer can take cashier’s checks to the local dealership (as agent for the finance company) to do the transaction. But, then I’m concerned about paying taxes, as if I bought the car from the dealership, which I might as well buy a car from a dealership. I’m pretty sure this is a common thing that happens a lot. Any experience with this in the LR?
Get a bank loan for the car… they will deal with all the stuff. They deal with this kind of crap all the time, you don’t need to step in this minefield and end up with no title or a lien on a car you paid for in full. After the title comes back go pay off the bank loan.
Get a bank loan for the car… they will deal with all the stuff. They deal with this kind of crap all the time, you don’t need to step in this minefield and end up with no title or a lien on a car you paid for in full. After the title comes back go pay off the bank loan.
Interesting. Since I didn’t need a loan, I never thought about this solution. Good idea. I’m a little concerned that this will slow down the process, but it’s a very good option that I didn’t consider. Thanks.
Buying the car from a private party does not mean you don’t have to pay taxes on the purchase. Otherwise, yeah, go talk to the bank, they probably deal with this daily.
Get a bank loan for the car… they will deal with all the stuff. They deal with this kind of crap all the time, you don’t need to step in this minefield and end up with no title or a lien on a car you paid for in full. After the title comes back go pay off the bank loan.
OK, at your suggestion (thanks, again), I called my credit union. Apparently, you were correct that they do this a lot. But, all they do is write a check to the financing company (e.g., Honda Financial), which is the same as what I would do. When I asked about the person taking the check to the casino, the rep just told me that: 1) the check is made out to Honda Financial (not the private party); and 2) he’s not worried about it as they do this all the time. So, it doesn’t seem like the credit union is doing anything that i wouldn’t do. Or, maybe, if something DID happen, then the credit union is better situated to deal with the issues because they are an interested party.
First point is you have to pay taxes on the car whether you buy it from a private party or you do the transaction at the dealership. When you go to register the car, the state is going to want their piece of the pie and won’t let you register until the sales tax is paid.
Second, a bill of sale goes a long way in your situation. I had a similar issue on a car I bought. The wife and I drove 9 hours to go see the car we wanted to purchase from a PP, I took cash with me so I could negotiate on the price if we decided to buy. We decided to buy right then and drive the car back home. Purchase price was $8k and the seller owed $4k to his CU on the car. It was a Saturday and his bank was not open. I paid him the cash and he paid off the loan then had the title sent to me from his bank. To “insure” the transaction we completed a detailed bill of sale, pictures of his ID, and we had his boss witness and sign the bill of sale (met at his workplace). I was still a bit uneasy about not having the title in hand but the detailed bill of sale with 2 witnesses put my mind at ease. It all worked out in the end.
If I were you I would go to the Honda dealer and get it all taken care of, or go to your bank and have them do the transaction for you, should be fine either way.
The car previous to the last story we met at my CU, my CU paid off the seller’s loan then gave the seller the remainder, they took care of everything and I just signed. Very easy and safe.
if something DID happen, then the credit union is better situated to deal with the issues because they are an interested party**.
This.
99% of the time the transaction would sail through without issue…. the 1% is what you’re insuring against. You won’t be out more than a few bucks in interest and the potential hassle you avoid is huge.
There was a situation in a town close to me where some shady used car lot was not providing proper titles. People who paid cash were screwed, people who financed were fine as the bank or CU dealt with the mess.
When I worked at a credit union as an intern, at least once a week we had people pissed off when the credit union would issue a check to the dealership or finance company. These people were the people trying to take the money to the casino and not actually buy the car, so banks are well aware of how to deal with this.
Also if you go to a dealership to buy a used car you will have to deal with a used car salesman. I traded in my old truck for $6k, they had it listed on their website for $10k within 3 days, and they sold it within a week for Im assuming a $2-$4k profit.
Your best bet is to get a loan or go to the dealership to talk to their finance person. You will have to pay taxes regardless.