How to find buy a car when you have bad or no credit

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Step 1: Where to Find The Vehicle of Your Choice

Step 2: Making the Initial Contact (Common Questions and Answers)

Step 3: The Face to Face Presentation

Step 4: Closing the Deal

Step 5: Paperwork and Insurance

Definitions 17

Suggested “Assignment Agreement”

Telephone Information Sheet

Assignees Responsibilities

Power of Attorney

Uniform Commercial Code, Article 9, Section 311



PROBLEM: A person has a car he no longer can afford. It may be about to be repossessed.

PROBLEM: Another person has a “Bad Credit” history and cannot buy a car, but can well afford to make

the payment on a recent model vehicle.

SIMPLE SOLUTION: Put these two people together. One person will assume the other persons payments

and insurance.


A few years ago an industry emerged that served the needs of individuals who have had past credit

problems, but can now afford monthly car payments. These companies helped people with past credit

problems such as:





Medical Bills

No Past Credit History

Late Payments

Many Other Problems

These setbacks are held against these individuals by lending institutions for up to seven years.


These companies would find vehicle owners who can no longer afford their monthly payments. These

owners would gladly allow someone to take over payments on their vehicle in order to save their credit,

with no credit check.

SAVE $1,500/$3,000

These companies charge the Buyer/Assignee between $1,500.00 and $3,000.00 for their services just to

put these two parties together, without doing a credit check.

This information package gives you all the simple secrets on how these companies perform their services.

You can save the $1,500.00 to $3,000.00 fee that they would typically charge.


With your persistence and guidelines in this information package, you can get the recent model vehicle

that you want, without paying any fees or down payment.

(NOTE: This information will not assist you in going to a new or used car dealership to get a car. This

information is intended to target individuals wishing to sell their vehicles to an individual buyer, one on



Ideally, these sellers would like to sell their vehicle for the bank payoff amount. Several factors may be

preventing them from doing this:

A. They have high mileage.

B. They are unable to show their vehicle to a prospective buyer (because of work, school or other

conflicting situations).

C. They are in an area experiencing a soft used car market.

D. They put very little money down when they bought the car and still owe more than the book value

amount indicated.

E. They financed their car for a long period of time (6072 months) and have not built enough equity in the


F. The biggest reason is they cannot sell their vehicle because they simply owe more on the vehicle than

the vehicle is worth.


A. They can sell their car for market value, then pay the lien holder the difference of what they owe, (in

cash). This could cost the owner several thousands of dollars up front.

B. The second choice, which has recently gained in popularity, is letting the car go back to the lien holder.

(If the dreaded repossession choice is used, the owner will have a seriously damaged credit history for

seven years.)


You help the owner by taking over his or her monthly obligations (car payments and insurance), and the

owner helps you by putting you into a recent model vehicle. You both help the lien holder because you

will be making the payments on time and the lien holder will not have to take a big loss on the vehicle by

repossessing it.


The Suggested Assignment Agreement included in this information package is a suggested agreement

only. There may be provisions added to or deleted from the agreement between you and the assignor

(owner) to make the transaction acceptable to you both, but remember, it is intended for you to use as a

guideline only. The Assignment Agreement is between you and the owner of the vehicle. The vehicle

remains titled in the owners name until all payments are made and the original loan is paid off. At this

time, according to your Assignment Agreement with the owner, he/she has to sign the title over to you

within thirty (30) days after the car is paid off.


This type of transaction is very common with Real Estate. Typically, the owner of a house will rent his

property and still be solely responsible for the monthly mortgage payments. The payments are being made

even though the owner is not living in the house. The renters have a contract between them and the owner,

not involving the mortgage company. Some purchase agreements from the lien holders may have

provisions against subleasing or assignments , claiming it would be a default of contract. Many disregard

this provision and do not contact the lien holder for their approval, claiming that as long as the payments,

insurance and vehicle maintenance were maintained, the assignment of the vehicle would fulfill the lien

holders requirements, and it would not be necessary to inform the lien holder of the transaction. We

recommend that you contact the lien holder in writing to inform him about your agreement.


Using this system, an individual can obtain a vehicle on merits such as character and ability to pay, rather

than credit history. There are no turn downs. Everyone qualifies because a credit check is never run. Your

success is guaranteed.

Remember, you must be persistent, make several calls, and always project a good image over the

telephone and in person. This information is not intended for purchasing a vehicle from a new or used

automobile dealership. It is not our intent to give legal advice. Each state has different laws. If you have

any questions pertaining to state or local requirements, contact your State Department of Motor Vehicles

or your attorney.


Let us take this opportunity to explain what is meant by upside down or negative equity. Lets use the

following as an example: Say the owner of a car owes $12,000 to the bank for the payoff of his car. The

average retail value of the car (what a car lot would sell the vehicle for) is only $10,000. If the vehicle is

selling at a car lot for $10,000 then few people would be willing to pay them the $12,000 that they owe.

The loan value on this car (what the bank will loan someone with good credit) may be only $8,000. This

means that if a person with good credit wanted to buy this car for $12,000, they would have to borrow

$8,000 from the bank and would have to come up with another $4,000 in cash to satisfy the lien holder.


Payoff to Lien Holder $12,000

Average Loan Value $ 8,000

Average Retail $10,000

Difference or negative equity (in cash) $4,000

The seller will have a difficult time finding someone who is willing and able to put $4,000 in cash down

for a used car. A buyer with good credit can go to a dealership and get a new vehicle with only a few

hundred dollars down. So, the chances of the owner selling the car to a person with good credit are very


By explaining upside down or negative equity to the owner, you will let him know why he is having

problems selling the car and that he may only have three (3) options left at this point. The owners options


Option #1: Sell the car for market value of $10,000 and pay the bank $2,000 out of his own pocket.

Option #2: Turn the car back to the lien holder for repossession and not pay the lien holder the difference

of $2,000. This option will ruin the credit status of the owner for seven (7) years.

Option #3: He can let you assume his responsibilities of payments and insurance, save his credit status

and not have to pay the negative equity of $2,000.




You can find the vehicle of your choice in the auto want ads of your local newspaper, auto trader

advertising magazines, or any other publications that list vehicles for sale.

(NOTE: Finding an individual who is upside down or in a negative equity situation on their vehicle loan is

easy. Most cars within the first three years of their finance contract are in this situation. You may even

have a friend of family member in this situation. It goes without saying that a friend or family member

would be ideal under these circumstances).


Your local library will carry a NADA book. This book will give you the average retail price of any

particular car model. The NADA book is published monthly. It also gives you the amount that most banks

will finance on those models. If the payoff amount on a car is more than the NADA retail book value, then

you will know this seller is in an upside down position and will be very interested in talking to you.


The easiest owner to work with is one who is considering letting his car go back to the lien holder for

repossession. You can find these owners in your local newspaper or local car magazine. Best results are

obtained in aging these issues for two or three weeks before calling. The owners will always become more

flexible the longer they try to sell their vehicles if you focus on ads proclaiming “Take over payments” or

“Down and take over payments”. These are individuals who realize that they are in a negative equity

situation and cant sell their vehicle outright. Even though their ad requests a down payment, they will

almost always waive it.

Most lenders who recommend to the seller that he finds someone to take over his payments will still hold

this individual liable for the payments if there is a default. Many of these lenders will request an

application to be submitted from the assignee.

If the seller (assignor) has been making his payments on time, the lien holder may want to keep him in this

vehicle. They will want the assignee to have a stronger credit rating than the assignor, before they will

give their approval at all.

Traditionally, the companies mentioned earlier do not even contact or go through the lien holder. The

assignor still remains liable for the payments, whether or not an application is submitted.

This arrangement allows the owner to monitor his own payments so he is actually more secure, as is the

lien holder.

The companies contend that under the Uniform Commercial Code, Article 9. Section 311, the owner of

a vehicle has the right to assign his property regardless of provisions in the original purchase contract by

the lien holder (which might claim such a transaction to be in default). The lender will always hold the

original owner primarily liable for payments. Even though the payments are submitted by the assignee, the

lender will still acknowledge the assignor/owner as the driver and owner of the vehicle. This because, the

assignment agreement is between the assignee/buyer and assignor/owner, and not between the

assignee/buyer and the lender.


When you have identified several cars that you have an interest in, you are ready to make the initial

contact with the owner. Throughout this conversation your goal will be to find out if the owner is in a

negative equity position (or upside down) on their vehicle. Best results are obtained if the owner is just

asking for what he owes on the car.


Caller: Hello, I m calling about the car you have advertised in the paper. Is it still for sale?

Owner: Yes, its still for sale.

Caller: Can you tell me about it, what color, mileage, options, etc. , (refer to your telephone information

sheet). Are there any nicks or scratches?

Owner: (The owner will normally give you all the information, except for the price of the vehicle.)

Caller: How much are you asking for the car?

Owner: $12,188.00

Caller: Is that what you owe on it?

Owner: (Answer) Yes or No

Caller: (If the answer is Yes, ask how long he has been trying to sell the car). The reason Im asking these

questions is because I would like to take over the payments on this type of car. How much are your

monthly payments? (Try to get a feel for how badly he wants to get out of the car. If this vehicle sounds

appealing to you, and you sense the owner is flexible, set up an appointment to look at the car).

(If the answer is No, the owner may have put a large down payment on the car, and it may not be in a

negative equity situation, or he may not owe anything on the vehicle at all.)


You will typically have to make twenty or more phone calls to find a vehicle owner willing to assign his

vehicle. One very important thing to remember, be persistent keep calling. There are thousands of

desperate people needing to get out of their vehicles in every area of the country. Its also a good idea to

call the owner back a week or so after your first contact. The longer he sees that he cant sell his vehicle,

the more eager he will be to work with you.


The owner will normally want the car out of his name. His credit is riding on your making the payments.

You will need to show him that he is secure and protected in dealing with you. When meeting face to face,

it is extremely important that you present yourself in a professional manner. Treat this meeting as you

would a job interview. This person is essentially giving his approval of you to assume his $12,000.00 to

$17,000.00 investment. Look Sharp.

Once you have seen the car and feel that it is what you want, you are ready to make a proposal. Explain to

the owner that you earn more than enough income to afford this car payment, but you cannot get financing

from a bank because of some credit problems that you had in the past. Tell the owner strengths about

yourself that show your stability and credibility, such as:

Length of residence in your house or area

Length of current employment

Job description or job title

Home ownership if applicable

The reason for your credit problem

If you paid back past creditors

What your income level is with bonuses, future pay raises or possibly a job promotion

Describe what makes you a good risk. Let the owner know that you are building his equity in this vehicle,

until you pay it off. The more payments you make, the less will be owed on it. Give him a copy of the

enclosed credit report, personal references and a copy of your drivers license. Allow him to verify your

employment and that you make your rent or mortgage payments on time. Show them a copy of the

suggested Assignment Agreement.



Question: What if you wreck the car?

Answer: The insurance company will issue a check with both your name and the lien holders name on it.

This check will be applied towards repairing the vehicle.

Question: What if you get a ticket while driving this car?

Answer: Any points are charged to my individual drivers license, not to the car.

Question: What if you hit someone?

Answer: The Suggested Assignment Contract states that I am driving the vehicle, and am responsible for

all liabilities. Your liability is limited because I will carry 100/300/50 liability coverage or whatever your

Purchase Agreement with the lien holder requires, which will protect you. As the owner of this car, you

are put in the same position as an independent leasing company or car rental agency. You own the car, but

you are not driving it.

Question: How do I know that youll make these payments?

Answer: Youll receive a cashiers check or money order made out to the lien holder at least ten days before

your payment due date. If Im late, you have the legal right to take the vehicle back. Believe me, I dont

want to lose it. The agreement basically states that I will make the remaining payments or pay it off early.

As long as I do this, you are under contract to sign over the title to me. Nothing hidden, no surprises, its

fair and legally binding.

Question: Why do my tags stay on?

Answer: You are still the legal owner, just as leasing companies and rental agencies are. I am the one who

is primarily liable for what happens while its in my possession.

Question: What if you move and cannot be located?

Answer: You have a list of personal references, my drivers license number and my social security number.

Any repossession firm could track the car in a matter of hours. I can understand your concern, but let me

assure you that I have no intention of going to jail for car theft.


Once you have satisfied all the owners questions, and have subdued all fears, you need to get a

commitment. If the owner will not commit and wants to think about it, find out when the due date is for

the next payment. The closer he gets to the next payment, the more flexible he will become. If the owner

remains undecided, you may try offering him concessions. You could offer to make a whole payment or

two payments in advance. He may request some kind of security deposit, which would be held for

damages. At this point, be creative and willing to empathize with the owners concerns.


LIMITED POWER OF ATTORNEY This form needs to be signed by Assignor and notarized by a

Notary Public. It gives the Assignee the authorization to sign on behalf of Assignor in matters concerning

the vehicle. (To be attached to registration)

SUGGESTED ASSIGNMENT AGREEMENT The provisions recommended in this agreement are

meant to protect both parties. If individual concerns are not covered, they can be added while others can

be deleted. This agreement is only meant to be a guideline for constructing your own finalized contract.

CREDIT INFORMATION SHEET The Assignor will need some information on the Assignee just for

his protection. If the Assignee does not make payments, the Assignor will be able to give this information

over to a repossession firm on the Assignee just for his protection.

INSURANCE Insurance regulations differ widely from state to state. The simplest and most widely

accepted structure for this arrangement is as follows:

List the owner as primary insured and assignee as additional insured. The loss payee will always be the

lien holder. The policy address can be that of the assignor or assignee.

Insurance can remain on the existing owners policy by just adding the assignee as an additional insured.

The owner may prefer to set up a new policy so that the assignees driving record will not affect the rates

that he pays for his other vehicles.

Recommended liability limits of 100,000/300,000/50,000: 100,00 maximum limit of liability per person,

per accident; 300,000 maximum limit of liability for all persons per accident; 50,000 maximum liability

limit for property damage, per accident. These higher liability limits normally will account for a minor

increase in rates.

If the assignor has a poor driving record, that would make your insurance premiums prohibitive; however,

you do have some options. Some insurance companies will allow you to list the Assignee as Primary

Insured and the Assignor as NonDriving additional insured. They will treat the policy just like a normal

lease. In the place of the leasing company, they will insert the name of the Assignor. The Loss Payee

remains the bank or lien holder. Let the insurance company know that you have the Power of Attorney for

this vehicle.

If this is the direction that is most economical for you, then you may want to find a creative,

knowledgeable agent (this is not always easy). Many agents may reject your policy without fully

understanding the relationship or legality of it. We recommend talking directly to the underwriters if the

agent does not seem knowledgeable. If you do set up your policy in this manner, then you may want to

contact the Department of Motor Vehicles in order to see if a lease tag can be issued in your name without

changing the title.


Each state has different systems. We have found that the following is the most common.

Register Vehicle in Assignors name in care of Assignees name and address. Keep Limited Power of

Attorney with registration. In most states, limited power of attorney along with the assignment contract, is

sufficient to register a vehicle. Registration and license plates are to remain in Assignors name, (normally

leave the same license plate on the vehicle).


Assignor will receive all property taxes on vehicle and then forward to the assignee.


ASSIGNOR Person who has vehicle for sale or who wants to be relieved of monthly payments and


ASSIGNEE Person who wishes to assume assignors responsibilities of payments and insurance.

ASSIGNMENT AGREEMENT Agreement between assignor and assignee.

UPSIDE DOWN VEHICLE A vehicle in which the payoff is greater than the book or loan value of the

vehicle. (Also referred to as negative equity.)

LIEN HOLDER The lending institution that financed the vehicle for the assignor.

PURCHASE AGREEMENT Purchase contract between lien holder and assignor signed at the time the

vehicle is purchased.

LESSOR A person leasing an item to another person.

LESSEE A person leasing an item from another person.

ODOMETER Mileage indicator stating exact mileage on a vehicle.

ODOMETER DISCLOSURE STATEMENT A form required by Federal and State law indicating the

actual mileage of a vehicle upon transfer of ownership.

NEW COMPANIES A company that finds a vehicle owner, who must relinquish his vehicle because it is

close to repossession, and then finds a third party to assume the vehicle owners responsibilities of

payments, insurance and maintenance.

NADA BOOK (National Automobile Dealers Association) A monthly publication found in most libraries

that lists average retail selling prices and bank loan values of late model vehicles.


This agreement is made and entered into the date indicated below by and between (assignee) and

(assignor). Whereas the assignor holds legal title or interest to the vehicle described below and has same

financed with (lender) having agreed to pay lender (monthly) for another months (note payments) with a

residual amount of (if a lease). Whereas, the assignor is desirous of assigning or selling the vehicle and

assignee is desirous of accepting assignment and/or buying the vehicle.

In consideration of the mutual covenants hereinafter made and for other good and valuable consideration

the sufficiency and receipt of which is hereby acknowledged, the parties agree as follows:

1. Assignor agrees to assign the vehicle to assignee/buyer for the term of the assignors note payments due

his lender, and hereby authorizes assignee/buyer to drive same, but only for so long as assignee/buyer is

current in the assignment payments set out below in paragraph two (2). The vehicle cannot be taken out of

the state without written approval from the assignor.

2. Assignee/buyer agrees to pay as assignment payments for such vehicle, the monthly amount of

assignors note payments to Lender, and to pay same by cashiers check or money order made payable to

lender and to mail such payment to assignor at least ten (10) days before the day of each month beginning

on the 199 . Any late payments shall be in default of the agreement.

3. Assignee/buyer agrees to take out and maintain insurance on the vehicle satisfactory to assignors lender

and to name assignor as primary insured, assignee as additional insured and lender as loss payee.

Assignee/buyer further agrees and does hereby indemnify and hold assignor harmless from any damage or

liability arising out of assignee/buyers use of assigned vehicle.

4. Assignee/buyer understands and agrees that should he/she fail to timely pay any of the assignment

payments called for above, or allow the aforesaid insurance to lapse, or should assignors lender declare a

default under its note or loan agreement, or deem such loan repayment or the collateral to be insecure, this

Assignment/Purchase agreement shall terminate at once. Assignee/buyer shall no longer be deemed to be

an authorized driver of the vehicle, and assignee/ buyer agrees to return the vehicle to the assignor or his

agent immediately. Failure to do so shall result in the immediate repossession of the vehicle by assignor,

its agent or the lender or its agent.

5. Assignee/buyer shall have the option to purchase the vehicle upon (a) its full and timely compliance

with this agreement and (b) the payment of all note payments to lender. Thereupon, assignor will deliver

to assignee/buyer the vehicles certificate of title. Default under this assignment by assignee/buyer, or other

authorized termination of this agreement, shall forfeit any option to purchase the vehicle that

assignee/buyer may otherwise have had. Upon full compliance and satisfaction of the lien, assignor will

have 30 days to deliver title to assignee.

6. Normally, legal title to the vehicle shall at all times prior to assignee/buyers proper exercise of his/her

purchase option described above, remain in assignors name and possession if applicable.

7. During the term of this agreement, assignee/buyer agrees to maintain the vehicle in good repair and full

operation condition. Any failure to do so shall be grounds for termination of this assignment/purchase

agreement and assignee/buyer shall be personally liable to owner for the cost and expense of any repair

deferred maintenance, other than for normal use and wear and tear.

8. Upon a 48 hour notice to the assignee/buyer, assignor has the right to inspect the vehicle at a location of

his choice, no more than once a month.

9. Any additional or special provisions applying only to this agreement are written as follows:

10. This constitutes entire contract. This assignment agreement including any addendums or exhibits

hereto which are by this reference made a part hereof, contains the entire agreement relating to the

assignment of the vehicle and shall bind and insure to the benefit of all respective heirs, personal

representative, successors and assigns of the parties hereto except as herein above expressly limited. Any

oral representation or modifications of this assignment agreement shall be of no force and effect,

excepting modification in signed by the party to be charged. No delay or forbearance of assignor in the

exercise of any remedy or right will constitute a waiver thereof and the failure to exercise or a partial

exercise of a remedy or right shall not preclude a subsequent or the further exercise of the same or any

other right or remedy by assignor. Assignor shall have no liability for any delay in delivery of the vehicle

for any reason beyond the control of assignor.

In witness whereof, the parties have executed this agreement as of the ________________________ day

of __________________ 199_____, at

____________________________________________________________________ .

__________________________ __________________________

Assignee/Buyer Signature Assignor/Seller Signature

___________________________ __________________________

Print Name and Address Print Name and Address




Owner s Name:

Make of Car:





5 Speed Transmission

Automatic Transmission:

Monthly Payments:

Number of Payments Remaining:

Full Pay Off Amount:

Are Payments Current:

Address Where Car Is Located:

Owners Phone Number:


SUGGESTION: Make photocopies of the above questions. Then when you call and ask these questions

you will have an easy method of documenting their answers, as well as a convenient record for followup.


1. Make payments to assignor, by money order, cash or bank draft made out to lien holder/lender and

forward to assignor 10 days before due date. (NOTE: Put account number on money order or bank draft.

Assignor will promptly forward this to lien holder in order to maintain his credit status.)

2. Provide copy of insurance, naming assignor as primary insured, assignee as additional insured and lien

holder as loss payee.

3. Notify assignor of any change of address.

4. Provide assignor with credit application (included in this information package) and at least eight (8)

personal references.

5. Provide assignor with original assignment agreement.

6. Receive all manuals, warranties and other information pertaining to the vehicle. Keep warranty in the

name of assignor.

7. It will be the assignees responsibility to pay for and keep current the collision and liability insurance,

property tax, inspections, permits, and other taxes or fees pertaining to the vehicle.

8. Maintain the vehicle in excellent working condition as described in the owners manual.


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