Who is the Legal Owner of a Car on Finance?

happy man who has become legal owner of car

If you’re thinking about purchasing a car through a finance option, you’re not alone. Around nine out of 10 of the new cars sold in the UK are bought by people who use a finance option. However, there are still some grey areas when it comes to ownership.

More specifically, who is the legal owner of a car on finance? Is it the driver or the dealership? Read on as we provide the answers.

Who is the legal owner of a car on finance?

In truth, the answer is neither you nor the dealership. It’s the lender that provides the money. The person who drives the vehicle and maintains it – AKA you – is known as the Registered Keeper in legal parlance. In other words, you will make the repayments and deal with the day-to-day running of the car, but your name won’t be on the V5.

Is there any difference between the finance options?

Yes, there are, but only when the loan finishes. Both PCP and HP are agreements that require repaying before the V5 is transferred to you. However, something to keep in mind is the final payment regarding PCP. Unless you pay off the balloon repayment, you will not own the vehicle. Where you don’t have the cash or savings, you may have the option of taking out balloon payment finance instead. With Hire Purchase, the last instalment of your loan will clear the balance and make you the legal owner.

Do I have other options?

One thing you can do if you want to be declared the legal owner is to use a bank loan. That way, you pay back the money to the bank, and the vehicle is all yours from the outset. Of course, taking out an unsecured bank loan may not be an option for your circumstances. In addition, you may not find the terms competitive.

Find the right finance deal

At My Car Credit, we help drivers up and down the UK find the finance they need to upgrade their car – and eventually own it outright if preferred. It doesn’t matter whether your budget is small or if you don’t think you qualify, we try to accommodate everyone, including those looking for car finance with poor credit.

To find out more, please contact us on 01246 458 810 to speak to an advisor.

Representative APR 8.9%

Evolution Funding Ltd T/A My Car Credit

My Credit Rating

Excellent

  • You are a home owner
  • You have been on the electoral role for a long period of time
  • You have current credit arrangements and mortgage with no defaults
  • You have no CCJs, credit arrears or missed payments
  • You rarely apply for credit
  • You are employed or self-employed

Good

  • You are on the electoral role
  • You are a home owner or long standing tenant
  • You have a stable employment history
  • You have current credit arrangements with occasional missed payments
  • You have no CCJs

Fair

  • You are or have recently been on the electoral role
  • You may have recently changed address
  • You may have occasional missed payments
  • You may have an old CCJ
  • You may have regularly applied for credit

Poor

  • You may have had frequent changes in address
  • You may not be traceable on the voters roll
  • You may have exceeded credit card limits
  • You may have missed payments on current agreements
  • You may have had a CCJ in the past

Bad

  • You may not be traceable on the voters roll
  • Your credit cards are over their limits
  • You have recent CCJs
  • You may have been refused credit elsewhere
  • You may be in a debt management plan
£

X monthly repayments of
£X

Typical rate

Loan amount

Total payable

X% APR*

£X

£X

*for illustration purposes only

No impact on your credit score*

Representative Example

Borrowing £7,500 at a representative APR of 8.9%, annual interest rate (fixed) 8.86%, 47 monthly payments of £184.94 followed by 1 payment of £194.94 (incl. estimated £10 option to purchase fee), a deposit of £0.00, total cost of credit is £1,387.12, total amount payable is £8,887.12.

Evolution Funding Limited, trading as My Car Credit, is a credit broker and not a lender.

Please ensure you can afford the repayments for the duration of the loan before entering into a credit agreement.

*Initial application is a soft search. Should you progress, some lenders may perform a hard search on your credit file.

Require more help?

Got a question you can’t find the answer to, or need some advice and guidance around taking out car finance? Our Car Credit Specialists are friendly, experienced, and here to help so get in touch today!

I am self employed, can I still get car finance?

Self-employed lady wants to know if she can get car finance

Well, if you're self employed and looking for car finance, the short and positive answer is ‘yes’! The key thing will be proving your income, along with the usual checks on your credit score. We take you through the ins and outs of getting car finance as a self employed person. What's more, you'll get all the information you need to make your car buying journey as easy as possible.

Proof of income when self employed

The first thing that finance lenders will be looking for is proof of steady and regular income. Dependent on your credit score, the lender will probably want to see proof of income on paper. The reason for this is to assess your credit criteria and your ability to keep up with monthly repayments.

To work out your average income, lenders will usually total your income in the last three month’s bank statements and divide it by three. This then allows them to get a credit limit based on your proof of income. This can vary slightly if you have a lower credit score. In this case, you may be required to produce in excess of three months’ worth of bank statements or payslips to prove your income.

Monies that are authorised by lenders must be from a UK bank account in yours, or your spouse or partner’s name. Cash-in-hand cannot be used as proof of income. If the bank account is in your spouse or partner’s name, they will also need to be added to the finance application. Most finance companies will also not accept tax returns as proof of income.

Employment and address history

The lender will need to see a minimum of three year’s employment history, three year’s address history, and you’ll need to have been a UK resident for a minimum of five years.

Lenders are looking for evidence of stability in employment and address history – the longer you have been at your current job and address, the better.

Applying as a business

If you’re applying on behalf of your business, there are many things you need to take into account. Firstly, your business will need to have been registered and trading for a minimum of two years. Usually, lenders will take your net profit as financial reassurance. In addition, most will require it to be at least double the amount of the money you are looking to borrow.

When applying as a business, you’ll also need to decide whether the car being financed will be for business use. Where the business use of the car would be deemed excessive or abnormal, your application may be rejected by lenders.

As an example, some finance lenders won’t finance a car for self employed taxi drivers. This is because taxi drivers will be using the car much more frequently and adding more mileage than normal. This affects the car’s value more than if they were just using it for everyday driving.

What should I do if I’m struggling to show proof of income?

Focus on making sure that your credit profile is as strong as possible. We recommend ensuring you’re on the Electoral Roll. This improves your credit profile and proves your identity through a government-run system. In turn, this reassures lenders that they are not at risk from fraud or identity theft. There are also many other ways to improve your credit score.

If your credit rating is good and you can afford to, putting down a deposit is a good idea. Where possible, try to put as much money towards the car as possible for your circumstances. This helps to share the risk of the loan with the lender and give them further reassurance to approve your application.

Finally, consider using a guarantor or submitting a joint application. This lowers the risk for the lender and can increase your chances of getting accepted. However, please be sure you have a full understanding of your responsibilities when taking this route.

Additional information

Essentially, the more information the lender has on you, the more security they have. This can greatly improve the chances of them approving your car finance application. However, make sure that you are as honest as possible. You shouldn’t attempt to overstate your income. You may hope to increase your chances of being approved or get you a better rate. The downside is that finance lenders may see this as fraud, which could have serious implications.

Going self employed is many people’s dream – working for yourself means being responsible for your own success and directly reaping the rewards of your hard work. Driven by changes in the economic climate and helped along by the digital revolution, figures show that self-employment in the UK has increased in popularity. By the end of 2019, there were £5 million self employed people in the UK, up from £3.2 million in 2000. We want to help anybody that’s self employed to get car finance.

So, don’t lose heart if you’re self employed and want a car loan. Be assured that there are many different ways to obtain car finance. We hope our advice has been useful but if you need any more information about self employed car finance, we’re here to help!

Representative APR 8.9%

Evolution Funding Ltd T/A My Car Credit

My Credit Rating

Excellent

  • You are a home owner
  • You have been on the electoral role for a long period of time
  • You have current credit arrangements and mortgage with no defaults
  • You have no CCJs, credit arrears or missed payments
  • You rarely apply for credit
  • You are employed or self-employed

Good

  • You are on the electoral role
  • You are a home owner or long standing tenant
  • You have a stable employment history
  • You have current credit arrangements with occasional missed payments
  • You have no CCJs

Fair

  • You are or have recently been on the electoral role
  • You may have recently changed address
  • You may have occasional missed payments
  • You may have an old CCJ
  • You may have regularly applied for credit

Poor

  • You may have had frequent changes in address
  • You may not be traceable on the voters roll
  • You may have exceeded credit card limits
  • You may have missed payments on current agreements
  • You may have had a CCJ in the past

Bad

  • You may not be traceable on the voters roll
  • Your credit cards are over their limits
  • You have recent CCJs
  • You may have been refused credit elsewhere
  • You may be in a debt management plan
£

X monthly repayments of
£X

Typical rate

Loan amount

Total payable

X% APR*

£X

£X

*for illustration purposes only

No impact on your credit score*

Representative Example

Borrowing £7,500 at a representative APR of 8.9%, annual interest rate (fixed) 8.86%, 47 monthly payments of £184.94 followed by 1 payment of £194.94 (incl. estimated £10 option to purchase fee), a deposit of £0.00, total cost of credit is £1,387.12, total amount payable is £8,887.12.

Evolution Funding Limited, trading as My Car Credit, is a credit broker and not a lender.

Please ensure you can afford the repayments for the duration of the loan before entering into a credit agreement.

*Initial application is a soft search. Should you progress, some lenders may perform a hard search on your credit file.

Require more help?

Got a question you can’t find the answer to, or need some advice and guidance around taking out car finance? Our Car Credit Specialists are friendly, experienced, and here to help so get in touch today!

Smart Tips for Financing Your Next Car

Woman wearing sunglasses thinking about financing next car

The world of car finance can be confusing. This often leads people to make simple mistakes which can cost them lots of money. Don't worry – we're here to give you a few smart tips to making financing your next car a doddle.

Understand your credit score

This is the first thing you need to do before you get car finance. Unlike other loan deals (e.g. mortgages, credit cards) you’re more likely (but not guaranteed!) to get a car loan regardless of your credit score. This is because the lender knows they can always redeem their investment by taking the car. However, this means that you may be willing to accept the first offer a car lender gives you. Normally, car finance will advertise their best interest rate but when you read the finer details, this only applies to customers with good credit scores.

A better indication of interest rate is the representative APR. This is the rate that the majority of borrowers will get (at least 51% of customers).

Conducting a credit score check can give you a better idea of what rate to expect. Many car finance websites have free calculators. These allow you to work out your expected interest rate using your credit score.

Keep the term as short as you can afford

Put simply: the shorter, the better. When you look into finance options you may be tempted to take a long-term contract with fantastically small monthly repayments. However, in almost all cases this isn’t a good option. Essentially, the longer the term is on your contract, the more interest you’ll pay overall. So, whilst it might be cheaper in an immediate sense, you’ll end up paying more. We recommend keeping the term as short as you can afford, but without impacting on your quality of life.

Pay for extras upfront

Most car finance deals come with additional costs. These can include registration fees, documentation fees, as well as any other additional extras you want like extended warranties. These are all normal parts of a loan agreement and are nothing to worry about. However, try to pay them in cash. Adding extras onto your loan increases your monthly repayments and you’ll likely have to pay interest on it.

If you’re looking to finance your car the right way, you should start by conducting a soft search with My Car Credit. Our approach is a great way of finding out about your credit score and the car finance options available to you without affecting your credit profile. We’re ready to help you on your journey to a great car with a great finance plan.

Representative APR 8.9%

Evolution Funding Ltd T/A My Car Credit

My Credit Rating

Excellent

  • You are a home owner
  • You have been on the electoral role for a long period of time
  • You have current credit arrangements and mortgage with no defaults
  • You have no CCJs, credit arrears or missed payments
  • You rarely apply for credit
  • You are employed or self-employed

Good

  • You are on the electoral role
  • You are a home owner or long standing tenant
  • You have a stable employment history
  • You have current credit arrangements with occasional missed payments
  • You have no CCJs

Fair

  • You are or have recently been on the electoral role
  • You may have recently changed address
  • You may have occasional missed payments
  • You may have an old CCJ
  • You may have regularly applied for credit

Poor

  • You may have had frequent changes in address
  • You may not be traceable on the voters roll
  • You may have exceeded credit card limits
  • You may have missed payments on current agreements
  • You may have had a CCJ in the past

Bad

  • You may not be traceable on the voters roll
  • Your credit cards are over their limits
  • You have recent CCJs
  • You may have been refused credit elsewhere
  • You may be in a debt management plan
£

X monthly repayments of
£X

Typical rate

Loan amount

Total payable

X% APR*

£X

£X

*for illustration purposes only

No impact on your credit score*

Representative Example

Borrowing £7,500 at a representative APR of 8.9%, annual interest rate (fixed) 8.86%, 47 monthly payments of £184.94 followed by 1 payment of £194.94 (incl. estimated £10 option to purchase fee), a deposit of £0.00, total cost of credit is £1,387.12, total amount payable is £8,887.12.

Evolution Funding Limited, trading as My Car Credit, is a credit broker and not a lender.

Please ensure you can afford the repayments for the duration of the loan before entering into a credit agreement.

*Initial application is a soft search. Should you progress, some lenders may perform a hard search on your credit file.

Require more help?

Got a question you can’t find the answer to, or need some advice and guidance around taking out car finance? Our Car Credit Specialists are friendly, experienced, and here to help so get in touch today!