Who is the legal owner of a car on finance? And who’s the registered keeper?

By Geoff

Owners and registered keepers of a car on finance

Car finance is the most popular way to buy a new or used car.

By spreading the cost across manageable monthly payments, you can get behind the wheel of a much nicer car than you might have been able to afford in one payment.

However, buying a car on finance can seem baffling, particularly surrounding the owner and registered keeper status.

One top googled question is

‘Who is the legal owner of a car on finance?.

and another is

‘If I buy a car on finance, can someone else be the registered keeper?.

This article aims to inform you about the ownership of a car and the responsibilities of the registered keeper in a car finance agreement.

Who is the legal owner of a car on finance?

You have full legal ownership when you purchase a car outright (with cash or a personal loan).

However, you do not own the vehicle when you take out car finance. The finance company retain legal ownership until you make the final payment.

Typically you’ll receive the documents related to the vehicle, including the V5C registration document, which confirms that you are the vehicle’s registered keeper. But you are not the owner.

Although the finance company retain ownership of the car until final payment is made, they are not the registered keeper. You are (usually the vehicle’s primary driver). It’s the registered keeper who is responsible for the daily keeping of the car.

However, the owner is responsible for notifying the DVLA of changes to the registered keeper details (V5C) in the unlikely case that was to happen.

Out-of-date information on the V5C could cause the owner to become legally liable for offences linked to the vehicle, including road traffic accidents, parking offences and speeding fines.

Who is the registered keeper of a car on finance?

For legal and safety reasons, the registered keeper should be the person that ‘keeps’ the car daily and would typically be the main driver. Usually, they make the finance repayments for the vehicle.

The registered keeper is their point of contact if the police want to discuss any offences or queries relating to the car and the recipient of parking tickets, motoring offences, fines, etc.

The primary responsibility of the registered keeper is ensuring the car is insured, taxed, and serviced to keep it road-worthy and has a valid MOT certificate.

How might the type of finance affect car ownership?

A vehicle on finance legally belongs to the car finance provider until final payment is received.

But. Do the ownership rules vary depending on the type of car finance?

  1. Hire Purchase (HP)
  2. Personal Contract Purchase (PCP)
  3. Personal Contract Hire (PCH)
  4. Personal loan to buy a car

Legal ownership is only yours once you’ve made final payments unless you return the car to the finance company – depending on the car finance type.

Hire purchase who owns the car?

Hire purchase finance will allow you to spread the cost of the car over the entire payment period.

Legal ownership remains with the lending company throughout the agreement. And the borrower is the registered keeper.

Once you make the final repayment, you own the vehicle.

When financing a car on PCP, who is the legal owner?

A Personal Contract Purchase deal is not as straightforward.

Because, unlike HP, you have three options after the agreement expires when you come to the end of your payment plan.

You can:

  • Return the car to the finance provider.
  • Make a one-off final (balloon) payment to the finance company and become the car’s legal owner.
  • Take out another car finance deal with the same lender by using the equity in the returned vehicle.

The finance company is the legal owner, and the borrower is the registered keeper for the length of the agreement. You only become the car owner if you make the balloon payment at the end of the contract.

Who are the legal owners of a vehicle on personal contract hire (PCH)?

Personal Contract Hire is effectively leasing where you pay a finance company to hire a vehicle for an agreed lease period.

You make equal monthly repayments for the duration of the lease, and at the end, you return the car to the finance company.

During the agreement, you are the registered keeper and will receive the vehicle’s legal documentation.

Like an HP and PCP agreement, the finance provider will legally own the car with personal contract hire. However, with PCH, there’s usually no option to buy the vehicle at the end of your contract.

Who is the legal owner of a car purchased with a personal loan? 

With a personal loan, you borrow a sum of money from a lender, often a bank, and pay it back in fixed monthly repayments.

There are a couple of loan options when buying a car.

  • Secured loans –  a property typically secures the loan.
  • Unsecured loans –  security is not necessary.

These loans allow you to spend money on whatever you want if you buy a car. You have full ownership straightaway.

FAQs who is the legal owner and the registered on car finance contracts

Can you change the name on a car finance agreement?

No. You can’t change the name because you are not the car owner. The car belongs to the finance lender, and you won’t be the legal owner until you fully pay for the vehicle.

If you have difficulty keeping up with the repayments and want to sell the car, you’ll need to find another solution. An option is you could return the vehicle to the finance company!

A Voluntary Termination allows you to return a vehicle under an HP and PCP contract to the lender. You can end the agreement if you have repaid half (50%) of the total amount payable.

For example, let us assume the car costs £8,000 and you have made repayments of £3,000. You may owe an additional £1,000 if you wish to return the vehicle. Doing so would up the total paid to £4,000, equating to the required 50%.

However, it’s best to be proactive. If you are struggling, contact the lender. Don’t hesitate, and be honest. You may find they can help you out.

Do you get the V5C with a financed car?

Yes. As the registered keeper and name on the V5C, you receive all the legal documentation when financing a car, including the car’s V5C registration document.

The V5C, often referred to as the (logbook) provided by DVLA, is not proof of ownership. Instead, it states the registered keeper’s name and address as the vehicle’s responsible owner or principal driver.

The DVLA registered keeper is not the car’s legal owner if the vehicle is on finance.

Suppose a parent might purchase a car on behalf of their son or daughter. The parent may own the vehicle (unless subject to a finance or lease agreement) as they have purchased the car. The child registers the car with their name and address via DVLA and drives the vehicle.

Similarly, with company cars, the business might purchase a vehicle for an employee who registers their details with DVLA.

Who is the legal owner of a car on finance for inurance

One of the most common questions about insurance is who the car’s legal owner is when you take out a PCP deal or HP loan. The answer is almost always the finance company, not you. The borrower is the registered keeper named on the V5C but not the legal owner.

Usually, it won’t be the finance company that insures the vehicle. You’ll have to do it. And be careful because when you buy car insurance, and the car is on finance, you should tell the insurer you are not the legal owner.

Why! Because the car insurance company needs to inform the finance provider when your policy expires, is renewed or is cancelled. The insurer could invalidate your policy if you have an accident or damage the vehicle, and you’ve told them you’re the legal owner, but you are not!

If I buy a car on finance, can someone else be the registered keeper?

If you are looking to finance a car but don’t want to be the registered keeper, you’re most likely buying the vehicle for use by someone else.

Some finance companies allow you to finance a car but have someone else named the registered keeper.

Something you don’t want to do is not tell the finance company that you won’t be the registered keeper. Failing to be upfront with the lender can affect the finance application.

Suppose you apply for car finance on behalf of your son or daughter as a parent. Changing the name on the V5C to your child’s after receiving the car might compromise the financial agreement.

Alternatively, you might be taking out car finance for a vehicle to be driven by your partner. This scenario often occurs when one partner has a higher income than the other. The vehicle gets transferred from the borrower to the person using the car. Again failing to inform the finance company before signing could impact the contract.

Suppose you struggle to find a lender willing to finance a car for you without you being the registered keeper. In that case, you can always apply for a joint application. Both your names are on the agreement, and either can be the registered keeper.

>Can I sell a car with outstanding hire-purchase (HP) finance?

With HP and PCP finance agreements, it is illegal to sell the car privately whilst you have outstanding finance because the lender is the vehicle owner. You are not legally allowed to sell it until you have repaid the finance agreement or paid the settlement figure in full.

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