Suggestions for gifting a car

[Drachen]

You assume he'd be liable when he really wouldn't be. The insurance company or the legal system would have to completely fail to find the car owner guilty of anything.

I'd rather have a contract with an insurance company that a piece of paper between two buddies.

If you kill someone in my home and you're found guilty then its on you not the home owner. I understand that weirder has happened but the likelihood of someone who didn't commit the crime being held liable is rare and lot more rare than a buddy skipping out on paying.

Like you mentioned above its a reach and it got tossed. That kind of has nothing to stand on. Just like 90% of hand written paper contracts between pals.

Having the vehicle in his name and regularly checking to insure that the vehicle is covered by said driver offers way more protection.

You mention that they have to prove that the car owner (TIMVP) is not liable. Meantime, he may have to hire a lawyer, take time off of work, etc to make this happen. Really the absolute best solution here is for TIMVP to buy it, then "personally finance" the sale of it to his friend. Draw up a contract and have himself named as the lienholder. That way his claim on the car is valid, and his name isn't on it. The problem with this scenario is that he must pay taxes twice unless he can get the dealer to treat him like the bank.

[DPG21920]

You assume he'd be liable when he really wouldn't be. The insurance company or the legal system would have to completely fail to find the car owner guilty of anything.

I'd rather have a contract with an insurance company that a piece of paper between two buddies.

If you kill someone in my home and you're found guilty then its on you not the home owner. I understand that weirder has happened but the likelihood of someone who didn't commit the crime being held liable is rare and lot more rare than a buddy skipping out on paying.

Like you mentioned above its a reach and it got tossed. That kind of has nothing to stand on. Just like 90% of hand written paper contracts between pals.

Having the vehicle in his name and regularly checking to insure that the vehicle is covered by said driver offers way more protection.

This is not true at all. You can most definitely be held liable if the car is in your name, just like my example of one of our insureds.

[Wild Cobra]

I'm no legal expert, but I believe the best option is to buy the car with whatever method you choose, but immediately put the le in your friends name. Keep all legal responsibility off of you. I believe you can gift up to $10,000 a year with no tax consequences.

As for cars. I recently bough my daughter her first car. The ones that have good mileage are retaining their value very well, at least in my area. People seem to be parting with the less fuel efficient and buying the more fuel efficient. I don't see getting a decent car meeting your requirements for $8,000 or less unless you buy one that gets poor fuel economy. Hope I'm wrong.

[CosmicCowboy]

You mention that they have to prove that the car owner (TIMVP) is not liable. Meantime, he may have to hire a lawyer, take time off of work, etc to make this happen. Really the absolute best solution here is for TIMVP to buy it, then "personally finance" the sale of it to his friend. Draw up a contract and have himself named as the lienholder. That way his claim on the car is valid, and his name isn't on it. The problem with this scenario is that he must pay taxes twice unless he can get the dealer to treat him like the bank.

The dealership won't care, it's a cash sale. They can list the friend as the owner and TimVP as the lienholder when they transfer the le the first time.

[ChumpDumper]

Loans and gifts are two different things.

Just give him the money. Get a promissory note if you really want the money back someday, but I have found it's best to act as if you lost it gambling.

[Wild Cobra]

Tim...

I have a problem...

It's a bad idea to make such deals with friends. If this is truly a friend, just gift the car with no expectation of repayment. If money comes back your way then fine. Just don't expect it. Otherwise, you are setting yourself up to possibly lose a friend.

What's more important?

[CosmicCowboy]

BTW, I used this same technique when I bought my kids cars...I put the vehicle in their name and listed myself as a lienholder. I wanted the extra protection just in case. In a worst case scenario an attorney is gonna settle for insurance limits if they know the legal owner doesn't have any net worth but if the legal owner has a substantial net worth they will expend a lot more effort trying to get all they can get.

[timvp]

Yes, you can be held liable for things that happen in "your" car.

Thanks, yeah that is exactly what I was wondering.

You can avoid ownership liability issues and still maintain some control over the vehicle by listing yourself as lienholder...require his insurance to notify you of cancellation or non-payment. If he wrecks the car the insurance company pays you instead of him. If he tries to sell the car he has to get a release of lien from you first. The dealership you buy the car from can do all the paperwork for you.

Very good idea. Hadn't thought of that

[DPG21920]

Definitely the best way to do it is the lien holder route. You buy the car Timvp. Have them make you a lien holder. You then do an owner "financing" for your friend. It is now "his" car, even though you have the real le and interest. So he is the one who will have to insure the car.

Now, since their is a lien on the car, any claim payment will go to both of you (by law the insurance companies have to do this), and in order for him to cash any check from the insurance company, the lien holder (you) has to endorse it. You have now absolved yourself of any liability (just like normal lien holders, I cannot wreck a car, kill someone and then the family go after my lien holder), along with given yourself financial interest in the vehicle.

The key in all of this is that if a someone wants to insure a car in their name, but they do not have the le, in order for someone (the le owner) to be held liable, court would have to prove that le owner was the insureds "provider". In this case, you clearly are not, but in the case of father/son/daughter/family... it becomes more risky.

[Shelly]

Loans and gifts are two different things.

Just give him the money. Get a promissory note if you really want the money back someday, but I have found it's best to act as if you lost it gambling.

I agree with this. Just give him the $$ and let him deal with everything else.

[timvp]

It's a bad idea to make such deals with friends. If this is truly a friend, just gift the car with no expectation of repayment.

Yeah, that's basically what I'm doing. I offered to purchase the car as a complete gift but they insisted on the repayment. I'm fine with eating the ~$8K if that's what it comes down to. I just don't want to be liable in case of an accident. I'm not counting on the repayment and it's last on the list of priorities in this transaction.

I could theoretically purchase a new car for $20K and draw up payment arrangements but I wouldn't be comfortable with that type of business agreement between friends.

[timvp]

DPG21920, you work for an agency or solo?

[DPG21920]

Yeah, that's basically what I'm doing. I offered to purchase the car as a complete gift but they insisted on the repayment. I'm fine with eating the ~$8K if that's what it comes down to. I just don't want to be liable in case of an accident. I'm not counting on the repayment and it's last on the list of priorities in this transaction.

I could theoretically purchase a new car for $20K and draw up payment arrangements but I wouldn't be comfortable with that type of business agreement between friends.

Well, truly the lien way is the best of both worlds. You do not really have to collect money from him, you can just be the interest holder if you want to cover your financial arse to some degree without having to worry about repayment. You will also not have the liability issue.

[DPG21920]

DPG21920, you work for an agency or solo?

I work for an agency, but we are an independent agency and I am an independent agent. We are contracted with a ton of national companies.

I have called a guy I know about some cars on his lot (it is a nice, reputable, major lot), but he was out of the office, so he will be calling me back soon, and if not, I will follow up with him tomorrow and see what he has available that meets your criteria. I have purchased 2 cars from him and my family has as well.

If you have any questions you can give me a call at work (I can post the number if you or anyone else wants it). I can shop the insurance with all of our companies and get you a quote for free (especially if they require it when you purchase the car)

[ChumpDumper]

The only reason I would go through this leinholder business would be if I wanted to make repossessing the car an option. Seems like an unnecessary pain in the ass otherwise.

[CosmicCowboy]

I can shop the insurance with all of our companies and get you a quote for free (especially if they require it when you purchase the car)

They BETTER require it. They can lose their dealer license for selling a car without getting proof of insurance before it leaves the lot.

[BacktoBasics]

So it turns out CC was good for something.

[CosmicCowboy]

The only reason I would go through this leinholder business would be if I wanted to make repossessing the car an option. Seems like an unnecessary pain in the ass otherwise.

It's really quite simple. It's just one more block to fill out on the le application.

It's really an aid to reminding the friend that he promised to pay the loan back. He can't sell or trade in the car without squaring up with TimVP.

[DPG21920]

They BETTER require it. They can lose their dealer license for selling a car without getting proof of insurance before it leaves the lot.

Well if Timvp (LJ I believe) has a car already and it is insured, then it is automatically covered for 30 days. If he is just going with his friend and letting him purchase it, then he will need insurance on that specific car.

[timvp]

I have called a guy I know about some cars on his lot (it is a nice, reputable, major lot), but he was out of the office, so he will be calling me back soon, and if not, I will follow up with him tomorrow and see what he has available that meets your criteria. I have purchased 2 cars from him and my family has as well.

Cool, thanks.

If you have any questions you can give me a call at work (I can post the number if you or anyone else wants it). I can shop the insurance with all of our companies and get you a quote for free (especially if they require it when you purchase the car)

I'm not sure about the insurance situation. You can PM me your number or post it in here in case anyone else may be interested.

[Wild Cobra]

Yeah, that's basically what I'm doing. I offered to purchase the car as a complete gift but they insisted on the repayment. I'm fine with eating the ~$8K if that's what it comes down to. I just don't want to be liable in case of an accident. I'm not counting on the repayment and it's last on the list of priorities in this transaction.

I could theoretically purchase a new car for $20K and draw up payment arrangements but I wouldn't be comfortable with that type of business agreement between friends.

Cool. That's simply how I am with friends. If he later has a hard time paying you back, you can let him off the hook by saying. "That's OK, happens."

[DPG21920]

Cool, thanks.

I'm not sure about the insurance situation. You can PM me your number or post it in here in case anyone else may be interested.

Cool. Well even if it is you or your friend that is going to need insurance on it, just call me, I will get the info and quote it for whom ever needs the insurance

[CosmicCowboy]

TimVP, I REALLY want a new Polaris Ranger. They are about 8K. will you buy me one?

[timvp]

Lastly you can get a brand new Kia Rio for 7888 right now at world car, so that really fits all of your criteria and its new. Just a thought.

Now that you mention it, I do remember hearing that commercial on the radio. Although I'm sure that's the in-the-door price. Wonder what kind of out-the-door price I could get . . .

[timvp]

TimVP, I REALLY want a new Polaris Ranger. They are about 8K. will you buy me one?

Hold on. Let me check that chapter in my Jimcs50 handbook.