Sign up & start saving!
Get our weekly newsletter for the latest in money news, credit card offers + more ways to save
Finder is committed to editorial independence. While we receive compensation when you click links to partners, they do not influence our content.
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
{"niche":"USFCL"}
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.
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
Image source: Shutterstock
More guides on Finder
-
Does a car loan affect your mortgage application?
Find out how to increase your borrowing power and get approved for a mortgage even if you have a car loan.
-
Different types of mortgage loans
A 101 guide covering the types of mortgage loans every homebuyer should know.
-
How to avoid sneaky 401(k) fees
How to identify 401(k) fees and how they impact your bottom line.
-
How to start a cleaning business
From making a business plan and getting insurance to marketing and setting your prices — here’s how to start your own cleaning business.
-
Investing strategy: How growth stocks can make you money
Learn how to strategically find and invest in booming companies.
-
Investing in your 30s: 8 wealth-building tips
Prepare to revamp your asset allocation and explore new investment classes.
-
How to start investing in your 20s: 7 tips for beginners
7 tips for starting a portfolio if you’re new to investing.
-
How to deal with debt when you have bad credit
Credit counseling, debt relief programs and more options to consider.
-
Should I max out my 401(k)?
The rush of turning $19,500 into $1 million can be enticing, but it’s not always the best idea.
-
How to get rid of Private Mortgage Insurance (PMI)
Smart strategies that homeowners can use to get rid of Private Mortgage Insurance (PMI).
Ask an Expert