Key Post Car subject to HP how to buy? - Private Sale

I am interested in purchasing a car through a private sale. I have done a HPI and the car is subject to outstanding finance. I have read the threads about the horror stories of people buying unaware of HP agreements. However, my query simply relates to how do I safely proceed to complete a sale in this situation (did not find clear answer on this)?

Obviously, the safest is for the seller to clear the loan, wait for this to happen and then run another HPI. However, in all fairness how many private sellers can afford to do this? (How will he pay it off without selling the car?)

I've seen suggestions such as making one cheque out to the finance company and the balance to the seller. This seems reasonable but what are the potential problems? The main one I see is how do I know what the outstanding balance is? For example suppose I agree to pay €20k for the car and the seller says €10 is outstanding but what if all €20k is outstanding?

Likewise for the seller what if my cheque to the finance company bounces!!! (Just maybe I'm the one pulling the fast one.) The reason I bring this up is that while I would be ok about writing a cheque payable to a finance company I have reservations about handing over a bank draft even though it would be payable to the finance company. Are my reservations justified?

Any advice much appreciated.

CrazyWater said:

Likewise for the seller what if my cheque to the finance company bounces!!! (Just maybe I'm the one pulling the fast one.)

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There's no issue for the seller here, you take on all the risk. If the cheque bounces, the finance company can reposses the car leaving you with nothing.

Leo said:

There's no issue for the seller here, you take on all the risk. If the cheque bounces, the finance company can reposses the car leaving you with nothing.

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Ah yes of course. I should have thought of that.

So therefore if I satisfy myself of the amount outstanding (perhaps a company statement) and write a cheque payable to the finance company for that amount then everything should be ok?

Hi CrazyWater

The HP company owns the car. Only the HP company can sell you the car.

I don't know what the process is, but don't buy the car off the guy who is renting it from the HP company.

Brendan

Brendan,
Okay, well that's as clear as you can get. Thanks for the advice.
CW

Get a 'settlement quotation' from the finance company - i.e. get the current Hirer of the car to get this. You then go with the Hirer to the FInance Company premises and pay them (cash or draft) the amount which will clear the finance (the difference between this amount and the amount that you have agreed to buy the car is a matter between you and the other individual).
Bear in mind that it should be a settlement figure that you look for - not just the current balance owing ..... there will be a rebate of future interest charges applied to this if you settle early.

The Finance Company can give you a letter showing 'clearance' on the car once they have cleared funds.

The alternative is to do what is called a 'takeover' ... whereby you get the Finance Company to effectively transfer the Hire Purchase Agreement for the car into your name..... you would however then become bound by the terms of the original agreement. In the current climate this is unlikely to be the best route .

Thanks Bazzer

i bough an 07 320d in Dec that was subject to finance, now it helped that we knew the seller but we still done it by the book.

in this order :

Seller requested a settlement figure from the bank (PTSB)
When it we met up and i rang TSB and confirmed the figures and that the HP was in fact in relation to the actual car.
Then we got 2 drafts made up, one for TSB and lodged it ourselves in a TSB branch into the account that the HP was and the other for the seller.
we gave the seller the lodgement receipt and the balance draft and we then went on our merry way.

+1 Kceire

Goes on all the time.
I have bought two cars using similar methods.