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Owner financing

Discussion in 'Road Side Pub' started by jmsa540, Jun 11, 2018.

  1. jmsa540

    jmsa540 Well-Known Member Established Member

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    Have a guy who wants to buy my 96, and can only do payments. Cant get a loan through the bank since he just bought a house. Not looking for bashing comments just need advice on how i would go about this process if i were to personally finance him.

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  2. tones_RS3

    tones_RS3 I like members members. Premium Member Established Member

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    Wow, that's scary. Looks like he can't afford it if the bank won't finance him, whether he bought a house or not. Hard pass if it were me.
    Good luck man!
     
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  3. Hunter98SVT

    Hunter98SVT Maximum Over Rustle Established Member

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    Write up a payment schedule, you keep the title. Ask if he can put money down and figure out a payment amount and term length.

    Edit: Also make sure he had insurance and ask for a copy of his insurance card.
     
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  4. jeffh81

    jeffh81 Never Leaving Established Member

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    Tell him to beat his feet. Cash only
     
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  5. tones_RS3

    tones_RS3 I like members members. Premium Member Established Member

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    Have everything in writing as noted above, in case it goes to court.
    Also, have all the paperwork notarized.
     
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  6. Sinister04L

    Sinister04L RIP Kane Established Member

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    Hell no. Even if you do keep the title it'd be a complete PITA if it goes sideways, which it can easily do.
     
  7. Hunter98SVT

    Hunter98SVT Maximum Over Rustle Established Member

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    I've only done this with friends so I didn't worry that much. Random stranger... well that's up to you. I wouldn't.
     
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  8. GT Premi

    GT Premi Well known member Established Member

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    All the paperwork and contracts in the world are worthless to you, if he can't pay you when/if it ends up in court. Tell him to come back when he gets his money up.
     
  9. Klaus

    Klaus Premium Member Premium Member Established Member

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    Don't. But since you did not ask "should I?" I will not try to convince you not to.

    By doing so, you are no longer selling a car, but selling a car + assuming his credit risk + assuming the cost of enforcing your rights as lender. You should be paid for that.

    The credit risk is substantial since you are dealing with a guy that cannot afford to buy a used car and cannot finance it through traditional means. So the principle amount that you are financing should be market value of your car + premium for this. I would start at market value + 50% and would not settle for less than market value + 35%.

    Next is term. Keep it short, less than one year. Include a prepayment feature to incent him to pay you off early. If he pays you off w/in 6 months you reduce principle by 3% or something like that. If you are financing beyond a year charge a rate of >25% per year.

    Make sure your rights as lender and his as borrower are very well defined and also that it is very well defined what happens if he violates them. He has x days to pay you after payment date to pay you or he is in default. If he defaults you have right to repossess the car. Until car is fully paid off he must maintain it to your satisfaction or contract is nullified. Structure as a deed in lieu so that if he defaults all equity reverts to you. Put a GPS tracker in the wheel well in case you need to repossess it.

    Keep in mind, proper contracts are written for a third party in mind (i.e. judge), not the two parties to the contract. I would pay the few hundred bucks to a lawyer to draft this up for me if in your shoes, as it is not if there is a dispute, but when.
     
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  10. tones_RS3

    tones_RS3 I like members members. Premium Member Established Member

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    I'll agree with this. Too much work on the OP's end.
     
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  11. Dave M

    Dave M Member Established Member

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    Stay away... You can't really hold the title since the dude can't insure it if it's not in his name, so you'd have to put yourself on a new title in his name as the leinholder, then you're bound to all of the rules and regulations that the banks are when it comes to documentaion and reposessions. I've done deals like this with my family members and got burned, once when the car broke down, and once when they wrecked the car, and both times stopped paying me and I had to eat it... too many variables, and too much risk.
     
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  12. jmsa540

    jmsa540 Well-Known Member Established Member

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  13. Klaus

    Klaus Premium Member Premium Member Established Member

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    Good point, did not think of this. Do NOT transfer title.
     
  14. PaxtonShelby

    PaxtonShelby FRULE10 Established Member

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    There are other buyers out there. Pass. Not worth the hassle or the risk, regardless of the contract language.
     
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  15. RI-SVT

    RI-SVT TVS Powered Established Member

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    Too much of a headache, pass my friend.
     
  16. 03cobra#694

    03cobra#694 Want to play a game? Staff Member Super Moderator

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    Nope, have a friend that wants my pickup and asked if I’d do payments. Nope, certified check from you.
     
  17. Ohio Snake

    Ohio Snake Well-Known Member Established Member

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    Also, who is responsible for maintenance of the vehicle while under loan. Too many variables you cant control. I’d walk (run) away from that and don’t look back.


    Sent from my iPad using Tapatalk
     
  18. 03Sssnake

    03Sssnake TK-421 Established Member Beer Money Bros.

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    Never involve money and friendships, it has the tendency to end poorly. You are basically becoming his banker and I suspect money is tight with this guy, he will probably start to harbor some resentment and or take advantage of the friendship....even if the deal doesn't begin with those intentions.

    EDIT: misread, thought this was a buddy.
     
    Last edited: Jun 11, 2018
  19. Outlaw99

    Outlaw99 Join us. Moderator

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    Youll regret it. Have you ever in your life ever heard a "i did an owner finance deal and it went great!" Story?

    A month from now, there will be a post titled, svtp detectives in here please

    Subject content will be, i owner financed for a guy who seemed cool,,he has disappeared with my car and wont answer my calls.

    Sent from my Schlong using the svtperformance.com mobile app
     
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  20. HudsonFalcon

    HudsonFalcon Premium Member Premium Member Established Member Beer Money Bros.

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    I would let him do payments. As soon as the last payment is made he can have the car.
     
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