Car Finance Outstanding

This may be a stupid question, but I still need an answer. My father has just given me a new car, which I would like to keep. My present car is still on finance - 3 years outstanding. Can I just give it back to the finance co. or do I have to sell it and pay them? If the latter, how do I sell a car with outstanding finance?

sell the car and pay what you owe. I assume the value of the car is more than the amount of finance owed on the car. If they took the car back does that not mean that your credit history would be damaged.

You can sell on and pay off the finance co, or if the person buying is interested, you can transfer the package into that persons name (make sure you do your homework on the buyer first though)

If there is finance outstanding on a car, then the new onwer can lose the car if the finance is not paid by the previous owner.

Isn't this the idea of a HPI check.

I wondered this myslf, if you are buying a car with finance owed.
Previous owner says when you pay me I will clear the finance.
Previous takes your money and never clears finance.

Whats the best way around this?

I would guess arrange a short term loan to clear finance that has no relation to the car.

If the car is on hire purchase (which it probably is if you financed through the garage) you can return the car to the finance house once you have paid half of the hire purchase price - this will be stated on your contract. The finance house actually own the car until you have made the last payment and a 'purchase fee'.

Frank said:

I wondered this myslf, if you are buying a car with finance owed.
Previous owner says when you pay me I will clear the finance.
Previous takes your money and never clears finance.

Whats the best way around this?

I would guess arrange a short term loan to clear finance that has no relation to the car.

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You should insist the finance is cleared before you purchase the car or else clear the finance yourself and pay the seller the balance

Certainly go with Speedfreek on this one - use the half way rule - check your contract. If you give it back it will be sold at auction for peanuts and you will still owe the balance outstanding on the finance agreement. if you sell yourself still need to pay the balance and in any case unless you got permission from the Finance company you are not legally allowed to sell it. its not yours till the last payment is made.

If you are returning the car to the finance company with more than half repayments made, make sure you document all correspondance and have the car looked over by a mechanic and valet cleaned before returning. I returned a car to a finance company a couple of years ago. My father gave me his old car when he got a new one and the car on finance was worth less than the amount outstanding. I initially wrote to the company telling them that I was returning the car under the terms of the Hire Purchase act (check the section) telling them that they could collect it or I would arrange for delivery to a nominated location. I was also careful to point out that as I was excercising my rights under the relevant section of the act that they were not entitled to put a note of the termination of the agreement with any of the credit rating companies. The car then sat in my driveway for about 6 weeks until I telephoned them, told them it was off insurance and entirely their risk if it was stolen. They collected pretty promptly but then began protracted correspondance where they tried to charge me for damage to the car and valet cleaning as well as the difference between what I owed and what they got for the car when they sold it (I had it valet cleaned myself and inspected by a mechanic - no damage, had receipt and report to prove it). After making quite a number of phone calls to my husbands work place they eventually gave up. There is no adverse comment on any credit reports but I wouldn't chance trying to borrow from the same company again.

Imho, I would tell the potential buyer the story and get them to make the bank draft (or whatever method of payment) out to the finance company. Once cleared with the finance company, get them to send you a letter stating that the loan is cleared and give the buyer a copy with the tax book. Of course this only can work if there is a certain level of trust i.e. you know them and they know you.