Who is the legal owner of a car on finance?

By Geoff

Who is the legal owner of a car on finance?

Car finance is the most popular way to buy either 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 the first time you take out a car finance package.

One of the top googled questions is ‘Who is the legal owner of a car on finance?.

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

What is the difference between owning a car and being a registered keeper?

You have ownership straightaway when you purchase a car outright (with cash or a personal loan). The seller will transfer the car’s legal documentation to you and full ownership.

However, It is a bit more complicated with car finance.

When taking on a car finance deal, you get all 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.

Ownership during the agreement remains with the car finance company, and not until the final payment do you have legal ownership.

Who is the legal owner of a car?

The vehicle owner is the person or company that bought the vehicle or somebody who was given the car as a gift.

The owner may or may not be the registered keeper (usually the vehicle’s main driver).

It is not the vehicle owner responsible for the daily keeping of the car – that is the task of the registered keeper.

However, the owner is responsible for notifying the DVLA of changes to the registered keeper details (V5C).

Out of date information on the V5C could cause the owner to become legally liable for offences linked to the vehicle, including road traffic accidents, parking offences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 a car’s registered keeper?

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.

If the police want to discuss any offences or queries relating to the car, the registered keeper is their point of contact. They are also the recipient of parking tickets, motoring offences, fines, etc.

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

Who has car ownership during the finance?

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

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.

What happens to the finance options?

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

Who is the car’s legal owner on hire purchase (HP)?

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 you are the registered keeper.

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

Who is the car’s legal owner on a personal contract purchase (PCP)? 

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 provider 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 payback 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 the money on whatever you want if you buy a car. You have full ownership straightaway.

Can you change the name on a car finance agreement? 

You can’t do that because you are not the car owner. The car belongs to the finance lender, and you won’t be the legal owner until you have fully paid for the vehicle.

If you are having 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 both an HP and PCP contract to the lender. If you have repaid half (50%) of the total amount payable, you can end the agreement.

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 a V5C with a financed car?

Yes. 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 name and address of the registered keeper as the responsible owner or main driver of the vehicle.

The DVLA registered keeper is not always the car’s legal owner.

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.

Can you insure a car if you aren’t the legal owner? 

Yes! Here are a couple of reasons you might need to get car insurance on a vehicle you don’t own.

Insuring a car on finance

Suppose you buy a car with finance. Usually, it won’t be the finance provider 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 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!

Insuring a car, you borrow from somebody else

When you are driving a car belonging to someone else, You’ll need to get insured.

Don’t make the old mistake of assuming you can drive another car because you have insurance on your own vehicle.

A few (not many) car insurance policies allow you to drive another vehicle on your insurance but only third-party fire and theft. Not sufficient for most car-owners, they’ll probably want you to drive on fully comp cover.

Your options are:

  • Buy your own policy
  • Add yourself as a named driver
  • Buy a short term car insurance policy


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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