How do I buy a car that has a loan on it?

I want to purchase a car from a private seller, but he told me that he still owes money on it. How do I buy a car that has a loan on it? Is it even possible? I'm going to pay cash for it.

Answer
Some people may be scared to take on a car that’s still being financed, but as long as the seller is upfront with you about what he owes, you should be fine to acquire the car and its loan.
If you’ve done your homework—finding the value of the car, getting a Carfax report, and so on—you’re ready to buy the car.
You essentially have two options:
  • Go with the seller to his lender and pay off the loan (to ensure he doesn’t run off with the money)
  • Have a dealer act as a broker. The dealer will buy the car from the seller and resell it to you. You’ll pay a little extra to make sure everything goes smoothly
Never hand over cash to a seller that has a car lien, as they could just take the money and run.
Since you’re paying cash to take care of the loan, you also have the option to choose whatever car insurance coverage you want. With the Jerry app, you can compare liability, comprehensive, and collision rates to find the best deal for your car insurance needs.
Eric Schad
Answered on Nov 16, 2021
Eric Schad has been a freelance writer for nearly a decade, as well as an SEO specialist and editor for the past five years. Before getting behind the keyboard, he worked in the finance and music industries (the perfect combo). With a wide array of professional and personal experiences, he’s developed a knack for tone and branding across many different verticals. Away from the computer, Schad is a blues guitar shredder, crazed sports fan, and always down for a spontaneous trip anywhere around the globe.
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