Can you put a financed car in someone else’s name?

Roman Danaev

2 June 2022

There are many reasons why people might want to apply for car finance on behalf of someone else, but you should be careful about how it’s done. You could end up breaking the terms and conditions set out by your own bank or even end up losing money.

Putting a car loan in someone else’s name in the UK is almost certainly going against the terms and conditions set by your finance company, but it's not illegal. Here we’ll look at why putting car finance in someone else's name is a bad idea - and set out some of the problems you might run into if you try this.

Can you get car finance for someone else?

Fronting is not an option when it comes to buying a car with finance. So, you can't buy a car on finance using your name and give it to somebody else. This is because the finance agreement is in your name, and you’re the one who’s responsible for making the payments.

If you want to give somebody a car that you’ve bought using finance, you’ll need to pay off the finance agreement first. Once you own the car outright, you can give it to the person of your choice as a gift.

There are several ways to go about buying a car for someone else. The best way is to give them the money to buy the car outright. This way, there’s no confusion over who owns the car or who is responsible for making the payments.

If you're buying a car for someone else, you'll need to co-sign the finance agreement with them. This means that you'll be jointly responsible for the repayments. You'll also need to set up a direct debit from your account to make sure the monthly payments are made on time.

Can I take out car finance for my child?

You may be able to finance a car for your partner or child if you are the primary driver and owner of the vehicle. Lenders typically require that both parties use the car in order for them to qualify for financing. You will likely need to be a named driver of the vehicle on the insurance policy as well.

It is important to read over your credit agreement carefully to understand all of the terms and conditions before signing. If you have any questions, make sure to ask the lender so that you can be clear on what is expected of you.

Can my wife get a car loan for me?

While some lenders will let someone take out car finance for their spouse, they typically want both persons to use it.

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

The decision to front a finance agreement on behalf of another individual can be controversial, since some companies may consider this as fraud. When you apply for a car loan, you may be required to agree that you will be the main driver of the vehicle. And if you register a car in someone else's name, you violate your consent. Lenders will not support this practice. Therefore, it is important to be honest when agreeing to the terms of a car loan. And if you're looking for car loans, then consider Guarantor Loans instead, where someone with a good credit profile agrees to repay your debt if anything happens.

Can my mum get a car finance agreement for me?

Guarantor loans are a type of car finance agreement where repayments are guaranteed by a third party, typically a relative. This type of arrangement reduces the risk to the lender and makes it more likely that car finance will be approved. As the borrower, you are still responsible for making the agreed repayments. If you are unable to do so, the guarantor will be required to step in and make the payments on your behalf.

Applying for finance on behalf of someone else

The finance company is not going to loan money if they believe that you won’t be able or willing to repay it.

Let’s say that for whatever reason, whether it’s because of previously unpaid bills or insufficient evidence of income, the bank has decided it's too risky for them to give out loans for you.

By having a friend or family member apply on your behalf, you are trying to get around the finance company’s unwillingness to lend you money. The banks know this and will not approve of such an idea. You won't be able to get a loan even if another person applies for it on your behalf.

Accommodation deals

Finance companies don't like it when people try to finance a car that will be primarily used by someone else. This is called 'accommodation finance' and can be problematic because it goes against the way that finance companies operate.

Finance companies make their decisions based on factors such as personal details, employment status, credit history, and financial situation. They use this information to decide whether or not to approve a loan and the interest rate to charge. If they consider the applicant to be high risk, they may either charge a higher interest rate or refuse the loan altogether.

When someone applies for accommodation finance, they are usually hoping that the other person's credit rating or financial status will be better than their own and help them get approved for the loan. However, this means that the finance company is basing its decision on the wrong person. The car and the loan are for the person who will be driving it, not the person who is applying for the loan.

Essentially, by trying to get accommodation finance, you are bypassing all of the measures that the finance company has in place to make sure they are lending money responsibly. This can be risky for both parties involved.

Problems related to accommodation finance

You may be able to get a better deal on your accommodation finance if you’ve got a car, but there are some problems that can occur when dealing with finance companies.

You can always rely on friends to bail you out of a jam, but what happens when they no longer want the responsibility? Their lack of financing could lead not only to losing your vehicle, but they may end up trapped with a lot of debt that doesn't belong to them – which would be bad news for both parties involved.

If the finance company is unable to track down the vehicle when repossession is required, they will have no way to get the money back from the person who took out the loan. This can leave them in a difficult financial position and may even result in legal action being taken against them.

It’s important that you understand the risks involved with taking out a loan with a friend or family member, as well as the potential consequences that could arise if things go wrong.

Never rely on verbal promises from a car dealer

Car dealers often enable or even facilitate"accommodation deals,"in which the buyer essentially lies about their income or employment status in order to secure a loan. This puts the dealer in a dangerous position with the finance company providing the loans, as the terms and conditions of the finance contract will be very clear regarding such deals. If the buyer complains to the finance company, the salesman will deny any knowledge or responsibility, leaving the buyer in a big financial mess. Therefore, it is best to avoid any accommodation deals.

Do not commit fraud

When you apply for car finance, you are agreeing to be the primary driver and owner of the vehicle. If you are not the primary user of the vehicle, you are committing fraud. If someone asks you to apply for car finance on their behalf, you should say no. Not only is this against the law, but it can also ruin 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.

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