The topic that will be discuss is in relation to a company that may need to go into liquidation, and specifically, what to do about a car that is currently being financed by the company. The person asking the question wants to keep the car and is willing to transfer both the car and the financing into their own name.

They want to do this before the company goes into liquidation. There are a few things we need to  figure out to determine if that’s okay. First, the finance company needs to be okay with the proposed transfer. They’ll need to assess the credit of either yourself or whatever entity the
transfer is going into and be all right with that. Second, we need to assess if there’s any equity in the vehicle. We do that by estimating the resale value of the vehicle and subtracting the amount of financing still owed
on the vehicle.

Sometimes the amount owed on the vehicle is equal to or more than the resale value of the vehicle. This can happen when the financing and the vehicle or the lease arrangement is quite new, or if the vehicle is otherwise fully financed or nearly fully financed. If there’s no equity in the vehicle—meaning the financing exceeds the value of the vehicle or is equal to the resale value of the vehicle—then nothing further needs to happen at this point. The main thing is the financier needs to be okay and approve the transfer.

However, if there is equity in the vehicle, the company who presently owns the vehicle needs to be compensated for that, that can be done with a cash payment. to the bank account of the company that currently holds the vehicle for the amount of the equity.

For example, if the financing of the vehicle is $20,000 and the vehicle is worth $30,000 and the financier agrees to the transfer, you need to then pay the company $10,000, because that’s the equity in the vehicle. This is to prevent asset stripping and to avoid clawback during the expected liquidation.