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!

Calculating the Total Cost of Car Ownership

Buying a car is typically the second largest purchase that people will make (after a house). It’s true that you can find pretty decent nearly-new or used vehicles. This can make purchasing a car feel like a financially viable decision. But don’t forget that the vehicle itself is only the first step in the process – there are a number of other costs involved in owning a car.

Below, we detail the different variables that will affect the total cost of any car ownership. It’s best to be aware of all of these before you begin the process of purchasing – or even searching – for a new vehicle. This will ensure that you’re aware of your budgetary limits and personal requirements. Don’t forget that you can use our car finance calculator to establish what kind of numbers you’re looking at. Accordingly, you can then go into your search with eyes open.

Factors to consider in the cost of car ownership

The car itself – and lessons

If you’re already looking for a car, it’s likely that you know how to drive. However, you may be looking prospectively, in which case don’t forget that you’ll need to pay for driving lessons, too. You’ll also need to pay for both the theory and practical test, and your licenses.

Then there’s the car itself – the cost of this will hugely vary depending on make and model, as well as whether it’s a new vehicle or not. Keep in mind that as soon as you drive a new vehicle off the forecourt, its TMV (true market value) will immediately decrease. Typically, cars lose around 15% of their value every year.

Insurance

Again, the cost of your insurance is subject to a number of variables. If you’re a young driver, that is going to be significantly higher. What’s more, where you live and the car you buy will also impact your premium.

Fuel

The cost of fuel goes up and down depending on the market. However, you can generally use MPG figures (that’s mile per gallon) in order to work out how fuel efficient (or not) your vehicle is. Newer models are likely to have more accurate data available on this.  This is because since September 2018, the fuel consumption of all cars has had to be measured via the WLTP test (the Worldwide Harmonised Light Vehicle Test Procedure). Diesel cars are cheaper fuel-wise compared to petrol alternatives. However, their use is increasingly restricted and will be even more so come the 2030 Petrol and Diesel Ban.

Tax

Vehicle excise duty is an annual tax you have to pay, and it will vary depending on the emissions of the vehicle and its fuel economy. Cars that produce more emissions will be hit hardest by tax. Be aware, too, that as more people switch to electric or hybrid vehicles, there are tax-cuts and financial incentives to this move.

MOT, servicing, and maintenance

There are a number of different parts of a car, all of which need regular maintenance – from the tyres to your headlights. Once your vehicle ages over three years, it will need an annual mechanical check in order to ensure it’s roadworthy. As such, you need to factor both this and regular servicing into your budget.

Tips for reducing the total cost of car ownership

It’s not all doom and gloom – there are multiple ways you can be savvier about your vehicle purchase.

Insurance

Installing a black box to your car can reduce your premiums. Moreover, so can opting for a higher excess or even parking in a driveway or locked garage. If you purchase a cheaper model of car, this will also reduce your premiums. You may also end up paying less if you pay insurance annually rather than monthly. Under those circumstances, be sure to consider this lump sum payment into your budgeting.

For young drivers, taking the Pass Plus course will reduce costs, as will adding an older driver’s name to the policy in many cases. With insurance, it’s a good idea to shop around with different providers and get a feel for what deal best suits you.

Fuel and tax

You’ll find the best fuel economy with hybrid or electric cars. Not only is electricity cheaper than cars, you’re also doing your bit for the environment. In addition, you may benefit from tax incentives as a result. Before you buy, get a feel for whether or not you could take advantage of government grants. Consider your mileage, too, as this will determine how much you pay for fuel, and what vehicle would better suit your particular needs.

Maintenance and servicing

Manufacturers will often offer warranty plans that can help you manage your maintenance fees. Look at vehicles with longer warranty periods – some can be up to seven years. Shop around for a cheaper breakdown coverage, too, as this membership can end up being an exorbitant fee if you get the wrong one.

Vehicle depreciation

How significantly the value of a new vehicle depreciates is dependent on that vehicle. Buying cars that better hold onto their value will save you money in the long run. Of course, so will regular maintenance of the car and limiting its mileage. Consider, too, whether you really need a brand-new vehicle. Ask yourself whether a nearly-new car might serve its purpose and reduce the depreciation cost? Cars that are a year old are still great vehicles and their value depreciates at a much slower, steadier rate.

Any questions? Speak to My Car Credit today

We understand that it can be overwhelming trying to establish the total cost of car ownership. That’s why our car credit specialists are on hand to answer any queries you may have with the process. We’ve even got a one-stop shop of quality approved used and nearly-new cars that you can use to streamline the process for you.

Call our friendly team on 01246 458 810 today, and start getting a hold on the true ownership cost of your car.

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!

Buy Don’t Lease: The Benefits of Owning a Car

couple sat next to each other enjoying the benefits of owning a car

Having a car is a vital part of modern life. A lot of us drive daily and rely on our vehicles to do almost everything. In recent years, leasing has become a popular way of obtaining a car, but is it any better than buying or financing your next car? What are the benefits of owning a car? Here are our two cents on the debate.

Leasing a car

You can think of leasing like renting – you make monthly payments which give you use of the car until you are ready to give the car back.

Pros

  • You get newer models of a car that you might not be able to buy otherwise.
  • You make smaller repayments than when you buy a car.
  • You can change the car you drive (hassle-free) every few years.
  • You get tax advantages if the car is being driven for business purposes.

Cons

  • There are mileage restrictions that form part of your lease contract if exceeded these will incur an additional fee.
  • You end up paying more than what the car is worth, as you lease it during a period of rapid depreciation.
  • You are committed to completing the whole length of the loan.
  • You must return the vehicle in showroom condition – that means no alterations and no accidental stains or scuffs. Any changes will incur an additional fee.
  • Your car insurance will be higher.

Leasing is a good option for those that aren’t concerned about owning a car but would prefer to drive a new model every few years.

Buying a car

Buying a car is where you purchase a vehicle outright without any agreement or contract in place.

Pros

  • You can make any changes to the model (aesthetic or mechanic) that you see fit.
  • In the long run, it is the cheapest way to buy a car.
  • There are no mileage restrictions.
  • The car is a financial asset and you can sell it at any time.
  • Owning a car gives you the freedom to do what you want with it.

Cons

  • You have less protection than the consumer rights that come with a finance agreement.
  • You must pay a lump sum for the car in one go.
  • Your car loses value as it depreciates, losing around 60% of its value in the first three years.

Put simply, buying a car is a good option for those that can afford it and want the freedoms that come with upfront ownership.

Financing a car

Financing the purchase of your car is a great way of getting ownership of the vehicle without making one lump sum payment.

Pros

  • Financing allows you to spread the cost of a car and make affordable monthly payments throughout your agreement.
  • Making regular monthly repayments on a finance agreement is a great way to improve your credit score and prove your financial responsibility.
  • You have the option of owning your car at the end of your agreement.

Cons

  • The monthly payment can be higher than a lease option.
  • You can end up paying more than what the car is worth if you take on the wrong finance option.
  • Some finance agreements have restrictions on how you can use the vehicle.

There is no right and wrong when it comes to getting a car. We understand that it depends on any number of individual circumstances. Leasing is an affordable option for those that aren’t concerned with owning their vehicle. Buying outright requires the upfront cash but it does give you outright ownership and allows you the most freedom. Financing is a great option for people that want to own their vehicle but don’t want to make one large payment. If you’re looking at potential finance options for your next vehicle, why not get in touch with our team here at My Car Credit – our specialist advisors would love to hear from you.

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!