Buying a car from friend who still have loan on that car

posted 2 years ago in Finances
Post # 16
619 posts
Busy bee
  • Wedding: March 2019

Put a different way, if you start paying off his car for for him and he gets into financial trouble, the banks know he has it as an asset and will repossess the car you’re driving, legally. I would guess since he’s trying to illegally sell the car, his finances may not be square. 

You can finance a great car with <$4000! I bought my car from a no-haggle dealer that sells year-old rental cars. My 2016 had 32,000 miles on it, but was still under warranty, and the total purchase price with $2000 down still came out to $6000 less than a dealer! It was a great car-buying experience and I got a traditional auto loan through them with a major US bank, so, not shady at all. 

You might also consider joining a credit union and getting an auto loan through them. They can cut you a check for the full amount of the loan, which you can then use to purchase a car at auction for substantial savings! My friend did this, and paid her mechanic $200 to attend the auction with her. He checked out the cars she looked at and the fee was worth her peace of mind. 

Post # 17
3184 posts
Sugar bee

Nope. Shady AF. 

Post # 18
10664 posts
Sugar Beekeeper
  • Wedding: City, State

Moe1 :  

You may want to talk to your insurance company about this one.

And, I agree with the rest of the Bees—this is a really bad idea.  Not only will you be putting your money at risk, there’s also the high probability of laying waste to your relationship with your friend.

Car dealers have about a zillion types of financing now.  And business is dead at this time of the year.  Have you tried going that route?

Post # 19
7816 posts
Bumble Beekeeper

That really sucks that your friend got himself into a situation where he owes more on the car than its currently worth, but personally I wouldnm’t touch this with a 10-foot pole.

At most, tell him you’ll consider buying the car for whatever it’s worth at the time he has finished paying off the loan.

On second thought, $4000 will give you a sizeable down payment on a nice used car that you can buy without any shadiness. Go that route!

Post # 21
9805 posts
Buzzing Beekeeper
  • Wedding: City, State

Don’t do this.

Post # 22
1503 posts
Bumble bee
  • Wedding: August 2017

This sounds like something that will end up on Judge Judy

Post # 23
5889 posts
Bee Keeper
  • Wedding: April 2013

Moe1 :  Don’t do this.  What a mess.

You’ve said that you are an international student and dno’t know anything about cars.  Trust the wisdom of the group here, this is a really bad idea.  Walk away.  If you need a car, go pay cash for something inexpensive.  When you buy a car you should get the title free and clear.

Post # 24
619 posts
Busy bee
  • Wedding: March 2019

Are you a university student in the US? Go to your student resource center and tell them you need assistance buying a car. The staff there can probably give you some informal advice about their experiences where you’re located. Quite a few universities have advice pages for their international students. Below are two resources I found online: (contrary to this article, i would not recommend Craigslist for cars.)



Post # 25
681 posts
Busy bee

If you do not have the title, you do not own the car. Do not pay this person money for a car you will not own. You could easily buy a car, or lease a car with the $4,000.

Post # 26
13590 posts
Honey Beekeeper
  • Wedding: November 1999

Agreed, this is a HORRIBLE idea.  Don’t do it. 

Post # 27
143 posts
Blushing bee
  • Wedding: June 1993

Many car loans have a due on sale clause which means the bank or lender can call the loan balance due in full if the car is sold or changes ownership.

My aunt took over loan payments to help her mother in law out after her father in law passed away. My aunt paid payments for about 6 months, always on time, and she sent the payments herself directly to the lender. When the lender realized that the checks where coming from my aunt, they repossessed the car. My aunt lost all the money she paid and her’s MIL’s credit was damaged for having a repo.

It’s never a good idea to do things behind the lender’s back. Contracts are written by the lender for the lender’s best interests and legal protection.

Post # 28
991 posts
Busy bee
  • Wedding: June 2012

To be honest, sounds like your friend is taking advantage of you being an international student who has never owned a car here. 

Easy way out is to tell him you need the title to register it in your name and get insurance. And that the deal is off.

Post # 29
7413 posts
Busy Beekeeper
  • Wedding: October 2014

if he has a loan on the car, he doesn’t own it. The bank owns it. He can’t sell you what he doesn’t own. Go to CarMax and buy a car from them.

Post # 30
1628 posts
Bumble bee
  • Wedding: October 2018

Moe1 :    

I agree with PP’s. Your “friend” is totally taking advantage of you.  He/she knows that without the title you don’t own the car.  Who pays off a loan balance on a car they no longer have???   Noone, that’s who.  You’d walk out of your home one day to find that the car has been reposessed.

Bad idea bee. Bad, bad idea!  Go get a book “Buying a car for dummies” (yes this does exist).  It will tell you everything  you need to know about how to buy a car.  

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