Buy a second hand ? Here’s how to take over car payments

If you don’t have enough money to buy a used vehicle from a private seller, you can take on someone’s loan repayments. But the process of taking over payments on a used car is involved and may not be possible in some cases.

The steps to take out a car loan when buying a used car

Before taking out a car loan, make sure it’s the right option for you. You’ll need to go through the original lender and potential seller to close the deal – and you may have to pay a fee. Research both the car and the loan beforehand to make an informed decision.

1. The current owner needs to talk to their lender

First, ask the homeowner to call their lender and ask if you can take over the loan. If you can’t afford the payments, you’ll need to find another way to take care of the original loan before you buy the car. This can be done by taking out your own loan and working with your lender to coordinate repayment, or paying cash – if you have enough.

2. Prepare your supporting documents

You will likely need to bring proof of your income, such as your latest payslips and driver’s license. You can also coordinate with the seller ahead of time to make sure they have a letter of assignment – ​​or bill of sale – ready. As he is the one selling the car, he must prepare this document.

3. Meet the seller in person

Coordinate to meet in public and bring someone you trust. Also, do not send money to the seller before the meeting. If they demand payment before you see the car or finalize the details, walk away – it’s probably a scam.

4. Request a copy of the original contract

Ask the owner to bring a copy of the original contract or request a copy directly from the lender. Make sure you fully understand all loan details. Ask questions about any details that are unclear. This process will require you to apply to the lender so that they can check your creditworthiness. Keep in mind that you are not guaranteed to get exactly the same terms.

5. Try to find an agreement acceptable to both of you.

You will need to negotiate with the original lender and the potential seller. Consider the needs of each party and try to find common ground, if possible. After completing the transaction, sign the loan transfer and return it to the lender. Once this process is complete, you will be the main borrower of the car loan.

Questions to ask yourself before deciding to take over a car loan

It’s important that you exercise great care when deciding if you want to take over payments for another driver’s car. If you’re considering this option, here are some questions you should ask yourself before submitting an offer to the seller.

Is the car worth the loan payment?

Before you decide to take on loan payments on a car, you need to make sure you’re getting a car that’s worth the payments you’re going to make. In many cases, it can be a little more complicated, but better financially, to prequalify with other lenders and choose one that offers a better rate or less interest overall with a shorter term. . You’ll need to coordinate payoff between lenders, but it may be worth the extra work.

Will you be able to keep the car long enough to pay off the loan?

If you decide to take over the loan repayments, you need to make sure that you can keep the car for the number of years required by the original contract. In some cases, this can take longer than five years, so you need to make sure that you will be able to repay the loan without encountering any problems.

If you can’t keep the car that long, you might be stuck trying to sell the car while it still has a lien on it.

Will you have a car with a high loan balance?

If you’re taking over a car loan, you need to make sure the balance is affordable for you. If the seller owes $20,000 and sells the car for $25,000, you will assume the full loan balance plus $5,000. This is not an uncommon situation.

Next steps

If you don’t have the money to pay for the vehicle in full up front, you may want to consider taking over existing car payments. It may not be the most attractive option and the seller’s interest rate may not be the best. But it will ensure you get a car without having to save a big down payment and sign a new loan.

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