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Who legally owns a car on finance?

Until you’ve paid the full balance on your car finance, your car legally belongs to the finance company

Car finance

When you finance a car, the legal owner will always be the finance company until you’ve finished paying what’s owed.

When your car finance contract comes to an end and there’s nothing left to be paid (that includes balloon payments on Personal Contract Purchase contracts), you will become the legal owner and can think about selling or swapping your car.

While you’re still paying your finance agreement, you’ll be known as the registered keeper on all official documents.

Who is the legal owner of a car on finance?

If you are still paying for finance on your car, then you’re the registered keeper. The owner is the finance company until you’ve fully paid the balance on the contract.

Basically, if a car is on finance, you can’t be the owner – it’s only when your contract has ended that you get full ownership.

What’s the difference between owning a car and being a registered keeper?

If you bought your car outright or your finance contract is fully paid up and finished, you’re the legal owner of the car. If there’s still an outstanding balance on your car – you have finance to be paid or a balloon payment coming up – then you’re only the registered keeper.

All the documents that come with a financed car (like your V5C registration document) will say that you’re the registered keeper until you take over full ownership. You'll own the car as soon as it’s fully paid for, whether that be at the end of your contract or through an early settlement.

Who is the legal owner of a car on Hire Purchase (HP)?

Hire Purchase (HP) requires you to put down a deposit and spread the rest of car’s value across monthly payments, with some interest added on top. You’ll pay your car off monthly until the end of your contract, when you’ll sometimes have to pay a small ‘option to purchase’ fee, and then become the legal owner of the car.

While you’re still paying the finance on your HP contract, you’ll be known as the registered keeper. This will switch once you’re all paid up and the car no longer belongs to the finance company.

Who is the legal owner of a car on Personal Contract Purchase (PCP)?

Personal Contract Purchase (PCP) car finance is different to HP as you don’t automatically become the owner when your contract is coming to an end. As PCP covers the cost of your car’s depreciation and not the full value, you’ll still have an optional amount to pay to take ownership.

At the end of your PCP contract, you’ll have a few options:

  1. Pay a final balloon payment and become the legal owner of your car.

  2. Give the car back to the finance company, so you’ll no longer be the registered keeper or have the option of being the legal owner.

  3. Part-exchange for a new model and start again as a registered keeper.

Can you change the name on a car finance agreement?

You can’t usually swap the name on a car finance agreement – but there are some exceptions.

Each car finance contract is different and depends on the individual, so you might not qualify for the same finance that another person would.

Sometimes, a lender might be willing to do a credit check to see if the person you’re trying to transfer the finance to qualifies for the same loan. If they’re a good fit and would get approved for the same car finance, the lender might be happy for you to make the switch.

Can you insure your car if you are not the legal owner?

You can still insure your car if you’re not the legal owner – in fact, you need to! Even as the registered keeper of the car, you’ll need to make sure you’re fully insured, otherwise you’ll have some serious issues if anything was to happen to your car.

Car insurance companies are used to sorting insurance on finance vehicles, so you’re unlikely to have any issues – just make sure when you’re taking out your policy that you state who owns the car (the lender, if you’re financing your car).

If you’ve said you’re the owner when you’re not, you could invalidate your insurance in the event of an accident or damage.

Can I finance a car for somebody else?

You shouldn’t apply for any kind of car finance on behalf of somebody else. The finance company needs to know who is going to be using the vehicle and who will be the registered keeper, as they’ll create their finance agreements based on your personal details.

Learn more about car finance: