Quick question:
I have put down a deposit for a car in Melbourne. Seller needs to clear the loan on the car before I pay him the full amount, he says this will be done next week. Do I need to wait for a PPSR check to show no encumbrances on the car before I pick up or can I just request the letter from his finance company showing the loan has been fully paid off by him?
Thanks
A letter from the finance company saying the loan has been paid off can be provided instantly when the seller pays it off?
You can ring the finance company yourself and check. They typically have zero security checks.
Thanks for the tip mate , when finance company confirms loan has been paid off is it safe for me to pay fully for the car or should I wait for the ppsr to say it’s clear ?
When I turn over my main car each 2-3 yrs, I offer up both.
Just ask the seller to provide both, and make sure you have some cover (paperwork and the likes) to support your butt! Ask for a copy (if even redacted) copy of the rego and/or license.
Still shifty 3@5tards out there, but should assist!
One method Ive heard of is for you to pay the finance company direct (assuming the loan is lower than the purchase price)… Anything left over goes direct to the seller
Loan is higher than purchase price . So if I pay straight to finance , how do I know seller will pay his share ?
I guess you could get them to pay the finance company the difference first? Eg, so the purchase price is the only remaining debt against the car… So when you pay them direct, it clears all debt
Ok , how do I know the loan is settled when I pay? Do I need a letter from the finance company ?
Wouldn't there be an issue if the buyer pays and then the seller pulls out of the deal. Thanks for paying part of my loan
Exactly… this is why you tell them to clear the outstanding amount themselves. This way, if they pull out of the deal, it’s their money at risk, not yours. They are more prepared to go through with the deal if they need the money back quickly.
If you pay the finance company directly, you need to have the car in your possession at the time of payment and not let it out of your sight. A seller will seldom hand over a car while you wait for finance company to clear payment, so, likewise, don’t pay them until you can take the car at the same time.
Tell them to clear the lien and you will pay them when it’s cleared. If they need your money to clear the lien, that’s a them problem, not a you problem. Plenty more cars out there to buy that don’t have finance owing.
Also, read this thread from a month ago with someone asking a very similar question..,
Wow, I'm glad people don't apply that logic to buying a house.
Buying a house and a car are 2 entirely different and unrelated things financially, the comparison you are making is if you buy the house and they have a mortgage, then you as the buyer becomes responsible for their mortgage on buying the house.
Not the case at all.
Buying a house usually involves a shit load more paperwork and a lot more lawyers than what buying a car does.
Also, it’s not very often that a house has more owing on it than what it is worth. With cars, this is quite common as they depreciate faster at the start of the loan than what the repayments pay off.
You are also generally talking about an average loan of $20k~$80k on a car to hundreds of thousands up to millions of dollars on loans for houses.
And, it’s not like someone can just up and move interstate and take the house you just paid them for with them…
So, yeah, I’m glad they don’t apply “house buying logic” to buying cars.
If you want to take the risk when you buy encumbered cars that have more owing than what they are worth, be my guest. It is just easier to tell the seller to sort the finance out, clear the debt and you will be back to purchase the vehicle when it has a clear title.
sounds like a bad financing decision. selling the car and wont cover the balance owing.
Especially selling a car in this climate.
I once sold a car in encumbrance. the buyer settled the loan and paid me the difference.
Ideally talk to the finance institution to check if the amount owing has been settled in full.
Walk away. There’s plenty of other cars out there.
Its different if the amount owing is less Han the value. You pay the finance co, balance to the seller.
yep this. there's enough risk as it is with 2nd hand cars.
if you have a car that is still on loan and you wont do nothing to fix your own finances before you sell it then why the F should a buyer be interested
this is unless its a 2018 BMW M4 or something high end high priced that is expected to be under loan and the seller does the paperwork to help you out
but if its an avg sub $10k banger then it smacks of super dodge esp. if the car is from greenacre or bankstown lol you get the drill
what if seller clears finance first, showing me a letter from finance company saying its cleared. is it safe to then pay the full amount of the car to him?
Nope. What you do is then use that information on the letter (car and account details) to call the finance company and check yourself. The other thing you can do is wait for the fiance company to update the PPSR and do a check on it yourself.
A letter can be forged. Dont even let him ring the finance company on your behalf. Ring them yourself after you Google their phone number. Letters can be forged and if they call, they could just be calling a mate. Finance company direct, or wait for PPSR search to come up clear.
cheers for this mate, looks like safest way is: get him to provide the letter from finance company, then i call the company myself to confirm. will finance company reveal those details to me though? (privacy laws?).
Either.
I'd prefer the letter, but that could be forged.
PPSR will not update instantly. Could be a number of days or even a week or so.