Can you finance a car for someone else?

You can't finance a car in your name and give it to someone else. This practice, known as fronting, is illegal. The finance agreement is in your name, so you're responsible for the payments.

If you'd like to give someone a car bought on finance, you must first settle the finance agreement. Once the car is fully paid off and in your name, you can then gift it to whomever you choose.

The easiest way to buy a car for someone else is by giving them the money to purchase it outright. This approach avoids any confusion over ownership and payment responsibilities.

If you prefer to finance the car, you'll need to co-sign the agreement with the person. This makes both of you equally responsible for the repayments. Set up a direct debit from your account to ensure the payments are made on time.

Can I take out car finance for my child? 

Yes, you can finance a car for your child if you are the primary driver and owner of the vehicle. Lenders usually require that both you and your child use the car to qualify for financing. You will also need to be listed as a named driver on the insurance policy.

Before signing, carefully review your credit agreement to understand all terms and conditions. If anything is unclear, ask the lender directly to ensure you fully understand your obligations.

Can my wife get a car loan for me?

Yes, some lenders allow a spouse to take out car finance on behalf of their partner. However, they usually require that both of you will use the vehicle.

Can I take out a car loan and register the car in my wife’s name? 

Taking out a car loan and registering the car in your wife's name can be problematic. Lenders usually require you to be the main driver of the vehicle, and registering it in someone else’s name may breach the terms of your agreement. This could even be considered fraud by some companies.

It's crucial to be honest when signing a car loan agreement. If you're looking for alternatives, consider a Guarantor Loan, where someone with a strong credit history agrees to cover the repayments if you're unable to do so.

Can my mum, dad or any family member get a car finance agreement for me? 

Yes, your mum can help by acting as a guarantor on a car finance agreement. A guarantor loan means a third party, like your mum, guarantees the repayments, reducing the risk for the lender. Although this increases your chances of approval, you remain responsible for making the payments. If you can't meet the repayments, your mum, as the guarantor, will need to step in and cover them.

Applying for finance on behalf of someone else

Finance companies won’t lend money if they doubt your ability or willingness to repay it. If a bank finds you too risky—due to unpaid bills or lack of income—they won’t approve a loan.

Trying to bypass this by having a friend or family member apply for you isn’t a solution. Banks are aware of this tactic and won’t approve a loan under these circumstances. Even if someone else applies on your behalf, the loan is unlikely to be approved.

Accommodation deals

Finance companies are wary of what's known as 'accommodation finance'—where you take out a car loan, but someone else ends up driving the car. This practice isn’t just frowned upon; it goes against how these companies operate.

When you apply for car finance, lenders look closely at your personal details, employment status, credit history, and overall financial situation. They use this information to decide whether to approve your loan and set the interest rate. If they see you as a high risk, they might raise the interest rate or deny the loan altogether.

With accommodation finance, you’re essentially trying to use someone else’s stronger credit profile to secure a loan that’s really for your benefit. This misleads the lender because they’re making their decision based on the wrong person’s financial standing. The car and the loan should reflect the person who’s actually going to be driving it.

In the end, attempting accommodation finance is like trying to game the system, which is risky for both you and the person helping you. It’s always better to be upfront and ensure that the loan reflects the true circumstances.

Problems related to accommodation finance

Accommodation finance might seem like a convenient option if you have a car, but it comes with significant risks when dealing with finance companies.

Relying on a friend or family member to secure finance for you might work initially, but what happens if they no longer want the responsibility? If they decide they can’t or won’t continue with the payments, not only could you lose your vehicle, but they could be left with a debt that isn’t theirs, leading to serious financial trouble for both of you.

If the finance company needs to repossess the vehicle but can’t locate it, they may struggle to recover the loan. This situation could put your friend or family member in a difficult financial position, potentially leading to legal action.

It’s crucial to understand the risks of taking out a loan with someone else’s help and the potential consequences if things go wrong. Always consider the long-term implications before involving others in your financial decisions.

Never rely on verbal promises from a car dealer

Some car dealers may facilitate "accommodation deals," where buyers misrepresent their income or employment status to secure a loan. This practice puts the dealer at risk with the finance company, as the finance contract terms strictly prohibit such deals. If the buyer later complains, the dealer will likely deny any involvement, leaving you in a difficult financial situation. It's best to steer clear of accommodation deals altogether.

Do not commit fraud

When you apply for car finance, you agree to be the primary driver and owner of the vehicle. If you’re not the primary user, you are committing fraud. If someone asks you to apply for car finance on their behalf, refuse immediately. This act is illegal and can damage friendships and relationships.

Speak to a specialist

If you're having trouble making your loan repayments, it's best to speak with a financial specialist before taking any further action. Carplus experts can help you explore all your options and come up with a plan that's right for you.