Problems With Taking Over Payments When Selling a Car

When you find the car of your dreams, you may go through extreme lengths to obtain that vehicle. This could include taking over someone else's car payments. This is a risky transaction, even if you're taking over the payments of a friend or relative. If you do decide to take over someone else's car payments, your safest bet is to go through the lender.

You Don't Own the Car

If you take over payments for a friend, relative or even a random seller and you don't go through the bank to have the loan transferred to you, you don't legally own the car. You're therefore making payments on a vehicle you don't own. If the owner of the vehicle decides at any time that she doesn't want to sell you the vehicle, there are an abundance of legal issues that can arise. The seller could decide at any time that she wants her car back --- you'd be in a legal dispute over ownership of the vehicle.

In the Event of an Accident

If you get into an accident in the car that you're making payments on and the car isn't legally yours, the insurance check for the damage to the vehicle may go to the owner of the car. New cars usually have gap insurance, which covers the gap between what's owed on the car and what the car is worth, according to Progressive. If the car you're making payments on is "totaled," a dispute may arise over who gets to keep the check from the insurance company.

In the Event of Car Repair

If the car you're making payments on needs repairs, you may have problems when you take it to the repair shop because you're not the registered owner of the vehicle. If the repair shop does allow you to have repairs done on the vehicle, legal problems could arise if you're not satisfied with the work that was performed on the vehicle.

If You Go Through the Lender

If you go through the lender and the vehicle is on a lease, you can have the lease transferred from the other party over to you. The problem here is that you may not have the same financial situation as the person to whom the vehicle was originally leased. According to Loan.com, if your credit isn't as good as the original lessee's, you may have to obtain a new loan with different terms. If your credit is poor, the financial institution that leased the vehicle to the other party may not do business with you.