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There's nothing improper about an arrangement such as this. Of course there are risks associated with doing this; if, for example, the employee should leave your employment and not have the continuing financial means to continue to make payments on the vehicle, then collecting the balance could be difficult. Whatever the specifics of the arrangement are, should be reduced to writing. There are no particular liabilities associated with an arrangement such as this.
Well, first of all, if you SELL the vehicle to him, the car would be registered in HIS name not yours. It makes no sense to keep the ownership in your name, if the objective is to sell the vehicle to him. If you were to do otherwise, you would have to list him as an authorized driver of the vehicle & most likely increase your liability insurance to make sure you are covered in the even of any accident where he may be liable. Given the relatively low value of the vehicle, if your intention is to sell the vehicle to him, you are much better off to actually transfer the title to the ownership to him.