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You're a dead man walking on this deal.
Firstly, a contract whether it be verbal or written, if it is illegal or improperly drawn-up, the contract will fail any test. With the issues on insurance and registration the contract is very grey unless you don't drive the vehicle.
Second point - The fact that you have been making regular payments (and no doubt you have proof of this with cheques or electronic transfers), you can establish a basis for a verbal contract, especially if it come down in court that you say/she say basis.
The gearbox isn't an issue - have you heard of 'caveat emptor' (let the buyer beware).
Thirdly. If you listen to Jesus H Christ and leave the car in a bad area and the car is damaged then you are responsible as blind freddy (including a judge) would understand your intent. A no no. Shame on you Jesus for this ridiculous advice.
Fourth and final point - If you can establish a verbal contract, the seller can as well and is within her rights to reposses the car if you fail to meet payments. If you make a payment outside the agreed arrangement, then you suffer the penalty. If the car is repossessed and it is damaged - all the losses are recoverable from you.
Nasty stuff as you can see. I would put on my diplomatic outfit and go and try to negotiate out of this mess. If I was a betting person. My money would go on the person that has title.
Lyn from oz.
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