As people become more knowledgeable about banking and financial matters, they grow to be more creative in finding solutions to monetary difficulties. They have devised new ways of managing finances. One such example is the take over car payments scheme currently being practiced by quite a number of people.
Take over car payments pertain to an instance where a person purchases a car subject of a pending car loan, which the owner-seller of the car secured over the same. Basically, take over car loan payments work in a similar way like a sale of a real property with assumption of mortgage, which is familiar to most people. In take over car payments, aside from a sum paid by the buyer to the seller, the buyer assumes payment of the outstanding balance of the loan, as part of the consideration or a condition for the sale of the car
There are people who would resort to take over car payments because more often than not, the car’s purchase price is marked down in contemplation of the attending burdensome condition, which is for the buyer to assume payment of the unpaid car loan obligation. Another reason why take over car payments is a hit to some classes of people is that on the part of the seller, it is a quick way to dispose of a personal property and at the same time to free oneself of the debt attached to the property. Conversely, for the buyer, take over car payments is an easy way to acquire a car, without having to go through the tedious process of car loan applications.
However, unless take over car payments is executed with somebody a person trusts, the transaction could be very risky for a number of reasons, which will be outlined below.
First, unknown to the buyers, they could end up paying for a bigger amount of money as they have entered into take over car payments with bad credit. For all they know, if they are not careful, they might be compelled to redeem the car for a certain amount at a foreclosure proceeding because the buyer has long been in default of his obligation. Worse, the buyer could eventually lose the car after having shelled out his hard-earned money pursuant to the take over car payments agreement.
Second, the seller could just easily abscond with the money paid to him under a take over car payments scheme, with the car still being registered in his name. In effect, he remains to be the legal owner of the car.
The above incidents only happen though when one is not careful when entering into take over car payments transaction. Before doing so, one must check whether the car is in great condition. He could do this by asking the owner to have the car brought to the mechanic. Also, the buyer must assure himself that the car he is buying with take over car payments was legally acquired in the first place. He must examine the car’s registration as well as the car loan documents and other pertinent papers.
Finally, one must put into paper the transaction entered into involving the take over car payments. The buyer must make sure that there are provisions concerning the transfer of the car registration in his name after all of the car purchase conditions have been complied with. To be sure, they must have the sale recorded with the pertinent government regulatory agency. Further, the bank or the financial institution where the car loan was secured must be apprised of the impending sale with take over car payments provision. This is important so that they could update their records and make the necessary annotations on the car loan agreement or they could draft a new agreement in favor of the buyer, whichever is applicable.