Who Legally Owns a Car on Finance?
These days, the majority of people purchase a car using finance - but where does that put you in regards to vehicle ownership?
Well, this is where the discussion of being a Registered Keeper vs the Legal Owner comes into play.
Difference between a Registered Keeper and Legal Owner
You are the registered keeper of a vehicle if you are still making payments on a loan. Generally, the registered keeper of the vehicle must be the one making the payments.
Meanwhile, the finance company is the actual legal owner of the car until the full balance on the agreement has been paid.
Until you acquire complete ownership, all the paperwork that comes with a financed vehicle, such as your V5C registration papers (otherwise known as the logbook), will state that you are the registered keeper of the car.
Only when the vehicle is completely paid for will you then become the owner.
If I have a car on finance, who owns the car?
There are a couple of primary finance options that you can choose to help buy your car:
- Hire Purchase (HP)
- Personal Contract Purchase (PCP)
If you are interested in leasing a car, however, then it's likely you've come across Personal Contract Hire (PCH), which works a little differently to the two above.
Elsewhere, there's always the classic method of financing a car: a Personal Loan.
Let's get into the details on each to see where you'd stand...
Learn more about Car Finance Options
Who is the legal owner of a car on a PCP finance agreement?
With a Personal Contract Purchase agreement, the cost of the car is spread over a payment schedule, with monthly payments covering for the cost of your car's depreciation during the agreement.
During this time, as long as you are the primary driver of the vehicle, you will be its registered keeper.
There are three choices when your payment plan completes - you'll be able to:
- Hand the car back to the finance company.
- Pay the Optional Final Payment to take ownership of the vehicle.
- Part-exchange for a new car and start a new agreement.
Until that final payment is paid, the car legally belongs to the finance company - so unless you take option number two, you won't become the car's legal owner.
Who is the legal owner of a car on HP finance agreement?
With a Hire Purchase agreement, the entire cost of the vehicle is spread out over a number of years via a monthly payment schedule.
During this time you will be the registered keeper and the finance company will have legal ownership. You will only become the legal owner after the payment plan is completed.
Who is the legal owner of a car on PCH finance agreement?
You are basically renting or leasing a vehicle on a Personal Contract Hire agreement, agreeing to pay set monthly amounts over a predetermined period.
The finance company will be the legal owner during this time and you will be named the registered keeper.
At the end of the agreement, you will need to hand back the car to the finance company, and therefore not have the opportunity to be come the legal owner.
Who is the legal owner with a personal loan?
If you buy a car outright with a personal loan (or cash), you will be the legal owner as well as the registered keeper of the car.
As soon as you use your loan to purchase the car, you will receive complete ownership and all related legal documentation.
Can you change the name on a car finance agreement?
You won't be able to change the name on the agreement until after you have made all the payments, as the car belongs to the finance company until then.
However, if you find that you are unable to make payments, you can hand the car back to the finance company as they are the legal owners.
Depending on how far into the agreement you are, or if you have missed any payments, it could be that you still owe the finance company further amounts.
You would need to check your terms and conditions and get in touch with your provider to see how they can help.
Can you insure your car if you are not the legal owner?
Even if you are not the legal owner, you will still be the registered keeper. It is the registered keeper's responsibility to ensure the vehicle is fully insured.
In the event of an accident or damage, you risk invalidating your car insurance if you claim to be the owner when you're not.