Truck 4 Sale.

April 27, 2007 9:56 AM

Should I 'lease' my truck to my friend?

Here's the situation - I have a truck that I wish to sell. My friend wishes to buy it from me. Due to a divorce, his credit rating is not good and cannot get a loan. I am going to sell it to him for approximately $5,500. He has offered to pay me in monthly installments ($300) until it is paid off. Does this sound like a bad idea? Is it even legal? Would I still be the legal owner until it was paid off? Is there any way to transfer my loan?

Apologies for the 'piggy-back' questions.

posted by Totally Zanzibarin' Ya to grab bag (14 comments total)

You do not want to be the owner of the truck until it is paid off, because you do not want to share liability when your friend gets into an accident. So no, you'd transfer the title to him up front. Once you do that you will have a receipt and his note of hand (IOU) promising to pay you, this note can lay out the payment schedule.

If the guy's credit isn't good enough to get a $5500 car loan, he might not be able to pay you either. If he's a good friend of yours and you don't care about the money, just give him the truck. If you think you're going to keep him as a friend and be sure of getting all the money that's coming to you, though, you're setting yourself up for a disappointment. Legal action to recover the money would ruin your friendship, and it would probably cost more than the truck is worth.
posted by ikkyu2 at 10:29 AM on April 27, 2007 [1 favorite]

I'm not so sure about the wisdom of transferring the title up front unless you document that you have a lien on it until it is paid off, just as lenders do when you borrow money from them for a car; also make sure you are listed as the loss payee on his insurance in case of accident. There are probably other things you need to document to make this work. As ikkyu2 said, though, unless you are willing to take a loss on the truck if (when?) he is unable to pay, you are putting you friendship at risk here.
posted by TedW at 10:34 AM on April 27, 2007

>If you think you're going to keep him as a friend and be sure of getting all the money that's coming to you

Close friend and you want a friend for life? Give him the truck...

Otherwise there is a distinct possibility that when he pays his monthly bills, yours will be shuffled/juggled to the bottom of the pile and forgotten occassionally/often - because, after all - you're his friend.
posted by jkaczor at 10:40 AM on April 27, 2007

eek. your intent i good, but this could go really badly.

you might talk to a lawyer to draw up some kind of agreement--this will protect both of you.

if this is a really good friend, cut him as good a deal as you can afford to do, but insist on cash. if you can't afford to give him a discount or he can't afford it even with your lowest tolerable price, sell the truck to someone else and help your friend another way.
posted by thinkingwoman at 11:06 AM on April 27, 2007

I don't know what the laws are in Canada with regards to insurance but you might want to make it contingent on him getting insurance coverage.
posted by JJ86 at 11:10 AM on April 27, 2007

nthing that you should give him the truck. Friendships > Money.
posted by PFL at 11:52 AM on April 27, 2007

If you want to keep him as a friend, don't do this. It will change the relationship. It doesn't sound like he can afford this, and eventually he'll miss a payment or two. They he'll start avoiding you. Don't do it.

In ten years the truck will be junked, buy you could still have this friend. If you really want to help him, give him the truck or sell it and buy him something that will fit his need.
posted by kc0dxh at 11:55 AM on April 27, 2007

You are friends, he's not a client, and you're much more understanding than [everyone else he owes money to]. If there is anyone else who makes a bigger stir than you do about the money every month then they're going to get your money.

And, no I don't know your friend, but I do know about loaning to friends/family.

The only circumstances that I loan money to a friend is if I sit down with them and go over their budget and find out exactly where their income is coming from and going to. And what part of it I'm going to get. If they can't answer all my questions and make me feel comfortable about it then they don't get money.

Yeah, it's a pain, but if they are getting the loan in good faith then they should be happy to do it. Since I've started doing that I've had 100% repayment of all loans.

And if you do this actually send a bill every month. It's a good reminder that you're serious without being a jerk.

Of just give him the truck in exchange for, say $600 up front.
posted by Ookseer at 11:57 AM on April 27, 2007

an idea...

open a corp. and transfer the car ownership. have the corp lease or sell him the car- this would prevent personal liability ....
posted by Izzmeister at 12:59 PM on April 27, 2007

try doing the loan using circlelending perhaps?
posted by Izzmeister at 1:01 PM on April 27, 2007

Izzmeister: It would cost more to draw up the incorporation papers than the truck is worth, and if the corporation is a 'sham' corporation - i.e., it exists for no other reason than to shield an individual person from liability with regard to their personal transactions - it wouldn't hold up in court anyway.
posted by ikkyu2 at 5:41 PM on April 27, 2007

This will make you ex-friends quicker than if you bang his ex-wife.
posted by BillBishop at 5:47 PM on April 27, 2007

Sometimes, even with the best people, deals can go bad. When this happens to a deal with a friend, you have to choose if you want to write off the money or write off the friendship (and choosing not to write off the money doesn't mean that you'll get the money).
posted by winston at 8:55 PM on April 27, 2007

Thanks for your input everybody. I have decided not to go ahead with this. As a non practicing existentialist, I'm just not comfortable with anyone owing me money. I would make a shitty mobster.

I don't really want to just give it to him. Although it would be quite generous, I just don't want to walk away with nothing. I will probably cut the price down to 3-3.5 k. He is a close friend afterall.

The truck is for his current wife, so there might be some avenues that we haven't discovered yet regarding loans, financing, etc.

I'll keep you posted if anyone is interested.
posted by Totally Zanzibarin' Ya at 1:00 PM on April 28, 2007