How to Finance a Car Purchase from a Friend or Relative?

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Many people choose to buy a used car from friends or family because it feels more reliable, and negotiating the price is often easier.

If you don’t have the cash ready, financing is an excellent option! This article guides you on how to finance a car purchase from a friend, what documents you’ll need, and alternative options if you decide not to finance.

Steps to Finance a Car from a Friend or Relative

• Research Financing Terms: Look into different financial institutions to find the best interest rates and review their terms to determine the maximum financing percentage they offer.
• Contact the Financial Institution: Let the representative know that you’re buying a car from a friend and need information on financing options. Be ready to provide details such as the car's model year, condition, any installed equipment, previous accidents, or repairs.

• Prepare Your Documents: After selecting a lender, ask about the required documents, such as: Down payment amount, maximum loan term, interest rates, and any promotions available for new customers.

• Wait for Evaluation and Approval: The lender will set up a car inspection to assess its value. If approved, prepare for the handover. On the handover date, have the down payment ready for the seller.

• Financing Costs: Remember to budget for financing fees, transfer fees, car insurance, and other administrative costs, which may amount to around 15,000 - 20,000 THB.

Documents Needed for Financing (for Buyer and Seller)

Documents the Buyer Should Prepare

• Copy of house registration, ID card
• Sales agreement
• Pay stubs, bank statements
• Employment verification letter
• Down payment (can help lower the interest rate)

Documents the Seller Should Prepare

• Copy of house registration, ID card
• Car registration document
• Sales agreement

Important Note: Check for Outstanding Payments

If the car has been financed previously, ensure there are no outstanding payments to avoid future issues.

Buying a Car from a Friend but on a Blacklist?

If you’re on a blacklist, you can still purchase a car. However, check your account status first. Higher account levels may require either a substantial down payment or a co-signer with excellent credit.

Options if You Don’t Want to Finance

• If the Car is Still Being Financed: You can transfer the existing financing agreement without needing a new loan.
• If the Car is Fully Paid Off: If the car is already paid off and registered under the seller’s name, you can transfer ownership and then use a title loan. This method is often simpler than applying for new financing.
• If Paying in Cash: Draft a purchase agreement, and then go to the Department of Land Transport to complete the transfer.

There are multiple ways to buy a used car from a friend or family member, and you can choose the option that suits you best.

Read More:  How Many Days Can You Delay Car Insurance Payment?

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