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How do you buy a car that’s still under finance?

What to do when your dream car has a loan on it.

Buying a car that someone hasn’t paid off isn’t impossible. But you’ll need to take some extra steps to make sure that title is clear. Otherwise, you could be responsible for more debt than you bargained.

What does it mean when a car is under finance?

If a car is under finance it means that the current owner hasn’t completely paid off a secured car loan. Secured car loans use the car as collateral in case the borrower defaults on the loan. If a borrower misses a payment, the bank will repossess the car.

Cars purchased with unsecured loans, credit cards or cash are not under finance because the buyer has paid for the car with their own money or with a loan that they’re personally held accountable for.

Compare loans for a car under finance

Name Product Filter Values Minimum credit score APR Loan term Requirements
PenFed Auto Loans
Starting at 1.79%
3 to 7 years
Active membership with PenFed
Low APR car loans from a well-known credit union.
No minimum credit score
3.9% to 27.9%
18+ years old, annual income of $4,000+, no active bankruptcies
Get pre-qualified for used car financing and receive competitive, personalized rates. Car Loans
Varies by network lender
Varies by lender
Must be a US citizen with a current US address and employed full-time or have guaranteed fixed income.
Apply with a simple online application to get paired with a local auto lender. No credit and bad credit accepted.
CarsDirect auto loans
No minimum credit score
Varies by network lender
Varies by network lender
Must provide proof of income, proof of residence, and proof of insurance.
Save time and effort with this lending service specializing in beginner-friendly or subprime car loan.
Auto Credit Express Car Loans
Must be employed full-time or have guaranteed fixed income of at least $1,500/month and be a current resident of the US or Canada.
Get connected with an auto lender near you, even if you have bad credit.
Monevo Auto Loans
3.99% to 35.99%
3 months to 12 years
Credit score of 500+, legal US resident and ages 18+.
Quickly compare multiple online lenders with competitive rates depending on your credit.
Good to excellent credit
Starting at 1.99%
Varies by lender
18+ years old, good to excellent credit, US citizen
Compare multiple financing options for auto refinance, new car purchase, used car purchase and lease buy out. Car Loans
1.89% to 27%
550+ credit score, no open bankruptcies, $24,000+ annual income, US citizen or permanent resident, 18+ years old
Get up to four offers in minutes through one simple application. Multiple financing types available including new cars, used cars and refinancing.

Compare up to 4 providers

Why is it hard to buy a car with a loan on it?

It can be hard to buy a car with a loan on it because the loan is attached to the car, not the owner. In other words, whoever owns the car is responsible for paying off the loan.

If the seller doesn’t pay back the loan, then the buyer could be in for a nasty surprise. To make sure you’re not taking on a debt-riddled car, you need to take some extra steps to buying a car with a clear title.

How can I buy a car with a loan on it?

Creating an open, honest environment is key to buying a car under finance. Here are some steps to take before buying a car under finance

Should I buy a car that’s under financing?

There’s nothing wrong with buying a financed car, but the responsibility is on you to make sure that the car will have a clean title when all is said and done with the sale. If you find the right car, don’t be put off by existing finance — just make sure everything is out in the open.

Dealers are required to prove cars aren’t under any sort of financing, however, private sellers aren’t subject to the same regulations.

Compare car loans

Bottom line

It’s possible to buy a car that the owner hasn’t already paid off yet. But you’ll need to make sure that you aren’t signing up for more debt than you bargained for by making sure the title is free.

Not worth the effort? Check out our car loans page to learn about your other financing options.

Frequently asked questions

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