Car Purchase Payment

Retuning to the community for advice so I don't get caught out later.

I inspected a Prado today (private seller) and liked it. We'll be paying cash for the purchase so no real dramas.

Owner told us the vehicle has finance owing, I also did the PPSR check and no surprises there so all good. Finance is about 80% of the car value.

My question is, what is the safest method of payment to ensure the finance company gets their share and don't hassle us afterwards.

1- Pay seller the full amount via bank transfer on the day of purchase and let them pay the bank back (that way the risk is that if the seller doesn't pay to the bank, we'll be trouble later?).
2- Pay the bank directly the amount owing and difference to the seller. I suppose this way at least we know the money goes to the bank but I suppose seller would want to get the transection to be cleared before they hand over the car.Or worse the seller walks away with free money paid the bank lol ( the only contract we have is via a text message?)

It's a decent amount so not sure what's the best way to do it. What's the low risk option for both parties in your opinion?


  • 2

    The only option

  • +13 votes

    1: No. Never do this. Never rely on the seller to pay off their debt.

    2: Do this. Deal with the finance company and get the payout details. Pay them what is owed and then pass on the remainder to the seller. Make sure you get copies of everything. Get copies of rego papers, licenses, proof of ownership, everything you can. They may try and get you to pay off their loan and then just vanish into thin air.

    3: Don't buy encumbered cars. Tell the seller to pay off the debt owing on the vehicle or get the lean removed. Pay the seller once the PPSR is clear and take the car.

    • Thank you. With option 2, when we pay the finance company can the seller walk away with the paid off car? As when we make the payment, the car is not in our name.. or you suggest we pay at the time of signing the paperwork (but then the seller would need to trust us for doing the right thing )

      • can the seller walk away with the paid off car?

        Absolutely. This is why you need to protect yourself. You are basically paying off someone else’s loan and then relying on them to be around when that clears. What do you do if they just up and vanish while you await confirmation of the finance being cleared?

        Clearing off the remaining finance is not instant. The payment may take a few days. You need to make sure that the vehicle isn’t going anywhere and that the sellers are legitimate and can be easily found once the payment clears and paperwork is finalised. Most people are genuine, but some are not.

        The only safe option is option 3; Tell them to clear the debt and you will pay them as soon as the debt is cleared. If they say that they need your money to clear the debt, that’s not a you problem, that’s a them problem.

        Plenty of cars to buy out there if this one is too hard. As soon as a see finance on a PPSR report, I go option 3. If they can’t clear the debt without my money, I just find another vehicle to buy.

        the only contract we have is via a text message

        This is a huge red flag for me. If people won’t talk to me on the phone, that just sets my scam-o-meter off the charts. I would seriously give this vehicle a wide berth.

        • Thank you. Sorry to clarify we have spoken over the phone and in person but the only thing in writing is in texts.

  • Pay the finance company what is owing, then the balance to the seller.

    Make sure the the seller has a current final amount owing (interest to the day).

  • If you are an NRMA, RACQ etc member I would give them a call and ask what is the safest way to purchase the car as they know the best way to do this without either party skipping town.

    IMHO I would pay the seller the balance owing after subtracting the finance company amount from the agreed price and obtain the finance amount owing directly from the finance company (assuming you can as you should not trust the seller as you have indicated). The reason for this is that at the end of the day the seller will only get the amount you give them after paying the finance company, so only give them this amount.

  • Ring the finance company and ask what to do, are there any hidden fees attached to it

  • How old is the Prado?

  • Sold my car few months ago with finance owing.
    1. I got a payout figure from the finance company sent to my email
    2. Forwarded the email to the buyer
    3. Buyer paid the finance company directly
    4. Buyer paid me the reminder
    5. Buyer collected car

    • So honest question, what stops the seller just disappearing at step 3.5?

      • Exactly my question.

      • Such a douche would surely wait until step 4.5? I'd also be wary of the seller switching the finance details on the invoice/email and the buyer unwittingly paying off some other vehicle.

      • Well he had previously come to my house & we exchanged ID

        • If you know enough to find them and "deal with them" them once they take the money and run, I'd be happy with that.

  • Get a statutory declaration stating that car has no finance owing after clearing the debt to the finance company before handing out any money.

  • I'd just tell the seller to pay out the finance and have clear title. However if they don't have the funds to do that and relying on your money to clear the outstanding amount it becomes a tricky situation.

    I guess you could find out the outstanding amount and transfer that directly to the finance company (hoping the seller doesn't screw you over by somehow withdrawing the amount).

    Traditional advice is you don't buy a car if it has finance on it from someone else.

    • (hoping the seller doesn't screw you over by somehow withdrawing the amount).

      Not a finance gure but I'm pretty certain car loans don't have a redraw facility so you should be safe here.

    • The amount owing to the finance company is likely to be the best part of 30-40 grand. Most people who take out car loans won't have that amount "laying around" to make a sale easy.

  • Most finance companies will provide an undertaking to release their PPSR security upon receipt of payment of $x. You should ask the seller for a copy of this letter. Draw your bank cheque as directed on the letter.

    Balance cheque/eft to the Seller.

    Some finance companies refuse to release same day but will do within 7 days etc (esanda & st George are two I've struck).

  • My recommendation is the owner should get a personal loan to pay off the finance on the Prado. That way the Prado no longer has finance owning. Then you're all clear to buy the vehicle safely without the possibility of you being taking advantage of/scammed. You would like to have faith in people but you never know. Hard part is them getting approved for a personal loan to pay out the car. Option 1 and 2 are too risky.

  • I'd be looking for an unencumbered vehicle personally.

  • I had a situation a few years back with the same dilemma. Myself as buyer and seller both went to the bank together where I personally paid the teller the nominated amount intro finance company account. We both received relevant receipts from the teller. I then drove the newly purchased car home, after signing all the transfer papers.

    • Absolutely this option. Make the transfers together in a branch of mutual convenience. This is probably the best solution to

      a. seller having confidence that they're getting their money and their car is getting paid off.
      b. buyer proving to the seller that funds are paid so they can take instant possession of the car.

  • I sold a van that had finance on it. the buyer paid the finance company direct and the balance to me once it all went through. Lots of red flags as he bought it sight unseen, worked in a remote region and was going to get a friend to pick it up.

    Once the finance company is paid they will send you a clearance letter (if you ask) saying something like: The contract subject to the above goods description was paid out on the15/08/18. Upon clearance of funds, we will have no further interest in these goods.

    Can take 6 more days before title is removed over goods.

  • There is a sucker born everyday.

    Only 1 Prado for sale in the whole of Australia then….. LOL.

    6 to $7000 cars I buy in cash, eveything else through car yard….

    I just hope you don't come on here complaining you got scammed……

    Contact the finance company directly…
    GO IN to the finance company WITH seller, and and you pay the finance company the amount you are willing to pay for the vehicle.

    If more than owing, then give the seller the rest. If less, YOU MUST have the seller PAY OUT what they OWE.

    Remember, the seller DOES NOT own the vehicle…. the finance company does.

  • And you will need a bank cheque for the finance co as they won't take cash.

  • One option is to go to the bank directly with the seller, pay off the loan in person, and then buy the car right then and there on the spot.

    The way I did it was I had someone come with me to the seller's house. We all sat in the car while I had the finance company on speaker phone. Paid off the debt, got confirmation, showed the seller my license and details, and we trusted each other and went out separate ways. No issues.

    Just be careful. If someone smells fishy, keeps looking at their phone, keeps asking about money etc, walk away.