Owner financing

jmsa540

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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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Hunter98SVT

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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.
 

tones_RS3

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

Hunter98SVT

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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.
 

Klaus

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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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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.
 

tones_RS3

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By doing so, you are no longer selling a car, but selling a car + assuming his credit risk + assuming the cost of ensuring that he pays. You should be paid for that.
I'll agree with this. Too much work on the OP's end.
 

Dave M

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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.
 

Klaus

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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.

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

03cobra#694

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

Ohio Snake

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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.


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03Sssnake

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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.
 
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Outlaw99

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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.

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