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Does this sound to good to be true?

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#1 BeakyHoneyButt

Posted 27 December 2012 - 04:16 PM

So i'll try to make this short.. here goes.

We are looking at a car that would usually sell for 45-50 grand to buy used.
So we see a car advertised for 41.000. that is perfection! We ring them, this is their story.. The car in question is leased, they need to sell the car to pay off the lease before they go OS. We saw the car advertised for 46.000 before xmas, but obviously they are heading OS next week and are getting despo so have reduced the price dramatically. Obviously we can't just trust them to give the 41,000 to the lease company!
So I ring consumer affairs, and they say it is illegal to sell a car if it is under finance, and a lease is the same as finance. But what buyers usually do is pay the lease company direct.
So we speak to the lease company, who have said we can make the cheque payable to them, and can get a final payout figure from them before we pay, so we can see that their is certainly no more owing on the car than the 41,000 asking price. And the sellers have been very honest and met all our requests thus far.
One side of me thinks it should be fine if all thats said above is done. But the other side of me is worried about something going wrong, if these people leave the country and the lease company take the car.

So my wise E.B-ers, i'm just asking for a fresh look at the situation, something me or DH may not have thought of etc etc. Or someone who may had had this experience.

#2 BeakyHoneyButt

Posted 27 December 2012 - 04:28 PM

Yep, spoke to the lease company about this car, obviously they couldn't speak to us about the sellers account.
And yes the seller is happy for us to give them a NN cheque written to the lease company AFTER we have seen a figure for the amount of the final payout.

Edited by foxgirls, 27 December 2012 - 04:28 PM.

#3 JuliaD

Posted 27 December 2012 - 04:29 PM

Its not illegal to sell a car under market value, that's their problem.
I don't see any issue with the deal, but just make sure you have the car checked out mechanically before purchase, and that the encumbrance (title) has been removed before you take ownership (your bank will do this for you anyway).
Just be aware though, that with the encumbrance on the car, it could take longer than a week to have everything finalised - this will be the only issue with the current owners heading overseas.

#4 Juki

Posted 27 December 2012 - 04:33 PM

If you aren't doing through financing, you can check the ownership and any encumberances on http://www.ppsr.gov.au/Pages/ppsr.aspx

#5 BeakyHoneyButt

Posted 27 December 2012 - 04:41 PM

JuliaD, we were told by legal aid that it is illegal for a person to sell a car if its under finance. Your right, the fact that it is well under market value is not an issue legally for either party.

Juki, we have paid the $30 odd dollars to ppsr, it showed the people who are selling the car are the owners, and the car is under lease/finance. So we have checked what the sellers are telling us, and it is true according to ppsr.

I am worried that there is someway after we have paid out the lease, and they have signed the car in our name and all that usual stuff has happened, that something i had not thought of could pop up, and these people are in Germany.

#6 aidensmum

Posted 27 December 2012 - 04:42 PM

I thought it was pretty normal to make a cheque out to the lease company or the finance company who has an interest in the vehicle.  How else would anyone with finance on a car sell it?  You want the title clear before you drive it away and they cant payout the finance until you do it for them.

#7 KT1978

Posted 27 December 2012 - 04:54 PM

I have heard of scams around these kind of things.

Make sure you check rego papers and vin numbers against the documents from the lease company.

It could be legit but tread carefully!

#8 kelliev

Posted 27 December 2012 - 05:01 PM

I worked in finance/leasing for many years and what you have done is absolutely correct. Under the terms and conditions of the lease if the lessee wishes to break the lease early the leasing company can request the vehicle back, sell it themselves and work out any shortfall with the lessee. In my almost 10 years in this industry I didn't see that occur once, in all honesty it's too time consuming for the financier. By the leasing company providing a payout figure, they are telling you & the lessee they are happy to release the vehicle title/ownership once the outstanding monies are paid.

Now that you have established there is an encumberance you need to request the vendor to obtain a payout letter from the finance company. This will provide you with the exact payout figure, payment details and an expiry date. To protect yourselves you need to make the payment to the finance company directly and then any additional funds in a separate payment to the vendor. DO NOT give the full amount to the vendor and expect they will pay out the loan, this will leave you wide open to danger. You want to make sure that finance is paid in full. You can request the finance company provide some sort of letter/receipt once payment is received and advising of their intention to release the encumbrance on the vehicle. The vendor may also want this confirmation from the finance company before releasing the vehicle to you anyway. It can be worth completing another encumberance check a month or so afterwards to ensure the encumberance has been removed as it can be a hassle when you try and sell if it's something that has been left on there - and years earlier! As long as you get the vendor to sign the transfer papers prior to them leaving the country I cannot see any issues with the sale. It all seems fairly genuine to me.

Enjoy your new car! original.gif

#9 kelliev

Posted 27 December 2012 - 05:03 PM

I should add (as PP pointed out) to check that the names match on the payout letter/rego papers etc and all identifiers match - rego, chassis/vin, engine numbers etc.

#10 LynnyP

Posted 27 December 2012 - 05:12 PM

As long as you follow the excellent advice from kelliev, I can't see any problem at all.  Good luck, the timing has worked for you by the looks.

#11 BeakyHoneyButt

Posted 27 December 2012 - 07:18 PM

Thank you so much to all of you for your replies. Kelliev you are a champ, thanks for that info, so valuable! So do you think there is any way the vendor can stuff around with a cheque that is specially written to the lease company? The lease company may only have offices in the city that works mon-Fri and we can't pick it up (DH working tomorrow) til sat.
Vendor is getting a final payout release thingo tomorrow so will be sure to re-check the names of rego, seller and the pprs check we did today also.
Thanks again everyone ... So helpful  biggrin.gif

#12 Illiterati

Posted 27 December 2012 - 07:46 PM

I bought a car from a bank manager this way. I paid him, he paid out lease company and the rego was transferred to us. I think it was a novated lease. It sounded dodgy but it went smoothly. I would do it again but would always still check the background etc.

#13 Mouth

Posted 27 December 2012 - 07:57 PM

I work in finance - kelliev is correct. No they can't stuff around with a cheque. Check with the lease company who the cheque should be made payable to, to pay out that lease. It is possible that the cheque may need to be made payable to the seller's name, as the account with the finance company is more than likely in the sellers name. I would be asking for bank transfer details to get it through faster/safer to the finance comany if I was you.

#14 Avidlearner1

Posted 27 December 2012 - 07:58 PM

We have done this before, just recently when we purchased my BMW and if you follow PP's excellent advice then everything seems above board.

Good luck and happy buying.

#15 Tealdash

Posted 27 December 2012 - 08:02 PM

To protect yourselves you need to make the payment to the finance company directly and then any additional funds in a separate payment to the vendor. DO NOT give the full amount to the vendor and expect they will pay out the loan, this will leave you wide open to danger.

I agree with this... original.gif

We have brought vehicles before and this is how it was all handled original.gif

#16 ~~HappyMummy~~

Posted 27 December 2012 - 08:08 PM

No big deal.  I've done this before - the seller told me the car had finance on it.  I checked and paid XX to the finance company directly and XX to the seller.  All was fine.

#17 TillyTake2

Posted 27 December 2012 - 08:10 PM

The only thing I can think of is that I would make sure you give both cheques to the seller at the time you take possession of the car. DON'T pay out the finance company & then give the reminder to the seller afterwards.

If you pay out the finance company (by DD or sending a cheque) before the handing over of the car has happened then what is to say they won't just do a runner & not give it to you now that you've kindly paid off their car!!

Edited by TillyTake2, 27 December 2012 - 08:12 PM.

#18 aussiecita

Posted 28 December 2012 - 12:30 PM

I used to work in vehicle finance, so I can chime in and say this is a common type of sale with leased vehicles, happens all the time. It protects everyone's interests. You pay the leasing company directly, so in the worst case scenario where the seller didn't hand over the vehicle, you'd get your money back, since you don't owe the leasing company anything. The seller doesn't worry about your money not clearing, since they won't give you the vehicle until it's been paid out.

Bear in mind, the leasing company can't confirm any info with you (payout figure, bank account, account number) unless the seller either calls or fills out a letter of authority to give you permission to talk to the leasing company. Nor can the leasing company confirm any amount was received unless you have this permission. The seller could also call them in your presence for your peace of mind, or show you letters on their letterhead. The seller can also request that the leasing company sends you an email/letter confirming the vehicle was paid out in full.

If there is a shortfall (i.e. the sellers owe more than you're buying it for) then they need to make that shortfall payment to the leasing company. Then the leasing company will issue a payout letter, confirming the exact amount that needs to be paid - which should be the amount you & the seller agreed upon. If you need to pay the seller more than the amount of finance owing, then you pay the e.g. $40k to leasing company, and $5k to the seller when you take possession of the vehicle.

Next step is making payment directly to the leasing company. If I recall correctly, we only accepted cheque or bank transfer - no direct debits or credit cards. The clearance time was 2-5 business days. We got a lot of frustrated people who waited till the eleventh hour to arrange the sale, and were cranky about the clearance periods. But what can you do? The leasing company needs to have received the money in full and it must clear before they will release the encumbrance over the vehicle.

On occasions, we would accept RTGS payments, so the title could be lifted asap - the same or next business day. It wasn't info we were allowed to volunteer though. This would probably only work if the seller politely called the leasing company, requested RTGS and had a friendly supervisor willing to go the extra mile for them. But they don't have to do this, so the seller can't expect it.

The title is on the PPSR, and we normally lifted them in bulk once or twice a week. Again, with the seller going overseas, I would advise the seller to call the leasing company, be friendly and build some rapport with them, and ask for it to be manually discharged once the seller knows the funds should have been received & cleared.

Hope this helps, enjoy the new car.

Edited by aussiecita, 28 December 2012 - 12:33 PM.

#19 aussiecita

Posted 28 December 2012 - 12:38 PM

QUOTE (TillyTake2 @ 27/12/2012, 08:10 PM) <{POST_SNAPBACK}>
The only thing I can think of is that I would make sure you give both cheques to the seller at the time you take possession of the car. DON'T pay out the finance company & then give the reminder to the seller afterwards.

Paying the money directly to the seller, and then hoping the seller pays all outstanding monies to the finance company is a really risky strategy for the buyer!

Also, writing a cheque to the seller is a painful way to make the final payout. If the OP pays the seller, then the seller deposits it in their bank and pays the finance company, you're looking at two different mandatory clearance periods before the finance company will lift the encumbrance and the vehicle can legally transfer hands. Much quicker and safer for the buyer to pay the finance company directly.

QUOTE (TillyTake2 @ 27/12/2012, 08:10 PM) <{POST_SNAPBACK}>
If you pay out the finance company (by DD or sending a cheque) before the handing over of the car has happened then what is to say they won't just do a runner & not give it to you now that you've kindly paid off their car!!

This is well-meaning but bad advice. The OP doesn't owe anything to the finance company. If she pays and the seller doesn't hand over the vehicle, then she has recourse to have her funds returned by the finance company. If the seller did a runner, then they owe money to the finance company, and the finance company will chase them.

Edited by aussiecita, 28 December 2012 - 12:42 PM.

#20 iwanttosleepin

Posted 28 December 2012 - 04:37 PM

we've actually had to do this ourselves as the seller!

Novated lease and moving overseas.

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