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Is this ok (Car finance)
http://www.x404.co.uk/forum/viewtopic.php?f=3&t=18388		 Page 1 of 1
Author:  Fogmeister [ Mon Feb 18, 2013 7:54 pm ]
Post subject:  Is this ok (Car finance)
So, my parents have a fairly poor credit rating and would struggle to get any finance on a car.

Their car is falling apart and will cost over a grand to get through the next MOT.

Is it OK for me to buy a car on finance under my name and they pay for it? I can afford the second car regardless of whether they actually pay or not but essentially they will be paying for it. Although probably they will pay me and I pay the car company.

Just wanted to check that it's actually legal to do that. We're not intending on screwing over insurance or anything. I'll still be the registered owner of the car for tax/insurance purposes.
Author:  jonbwfc [ Mon Feb 18, 2013 8:02 pm ]
Post subject:  Re: Is this ok (Car finance)
I don't see any legal reason why you couldn't buy a car and then effectively let someone else drive it and they pay you the same amount of money it costs you. However you would still be the one liable for the payments, so if they couldn't pay you or the car got written off, you'd be out of pocket. Remember when you sign on the dotted line you're declaring your intention to pay for the car, not necessarily to drive it. You could also just take out a personal loan for the value and then use it to buy your parents a car. That's perfectly legal.

However in theory you'd also have to consider the situation where this is effectively undeclared income - any money your parents gave to you would technically have be declared for income tax purposes.

Jon
Author:  ProfessorF [ Mon Feb 18, 2013 8:20 pm ]
Post subject:  Re: Is this ok (Car finance)
Couple of things to consider:
Do they like the car?
What is it's present resale value?
Do they like it enough to cover the cost?

These days, spending £1000 on another motor should see a few years of fairly trouble free motoring so long as they keep on top of the usual maintenance.
Spend £3-4k and you should be onto something quite reliable.
In which case, perhaps consider just facilitating a small-ish loan instead of a car lease for them, but be aware of jon's point about undeclared income; you may come a cropper there.
You're in effect sub-leasing the car, so just be careful and read all the small print. I'm sure you would anyway.
Author:  Fogmeister [ Mon Feb 18, 2013 8:25 pm ]
Post subject:  Re: Is this ok (Car finance)
I think it's only classed as sub-leasing if I try to register the car in their name. Which, if the HP is not fully paid, is illegal.

I think the money comes under the parents-to-children gift amount which is then not liable to tax.
Author:  JohnSheridan [ Mon Feb 18, 2013 8:32 pm ]
Post subject:  Re: Is this ok (Car finance)
Insurance will be a problem as if the credit agreement is in your name then for insurance purposes the car is yours and so they cannot insure it as they have no "insurable interest" - just like I couldn't insure your house as I don't own it.
Author:  Fogmeister [ Mon Feb 18, 2013 8:34 pm ]
Post subject:  Re: Is this ok (Car finance)
JohnSheridan wrote:
Insurance will be a problem as if the credit agreement is in your name then for insurance purposes the car is yours and so they cannot insure it as they have no "insurable interest" - just like I couldn't insure your house as I don't own it.

But when you insure a car you are asked "Are you the registered owner". The first few cars I had weren't mine but I insured them in my name. I just put the registered owner as my parents.

Just had a deeper look into it and some car insurance companies will not let you insure a car that belongs to someone else. But there are car insurance companies that will do it.
Author:  okenobi [ Mon Feb 18, 2013 8:36 pm ]
Post subject:  Re: Is this ok (Car finance)
Depends on the existing car. If the £1000 investment will make MOT, AND keep it running for another couple of years, I'd rather lend them the £1000.

Car finance in your name seems like an extreme measure for this case. As Prof says, £4k will get you far. If the existing car is really that bad, even £2000 will get you a solid 90s E Class, a ridiculously reliable 00s Civic, or anything diesel and VAG with decent history. New cars are shash...
Author:  Fogmeister [ Mon Feb 18, 2013 8:38 pm ]
Post subject:  Re: Is this ok (Car finance)
okenobi wrote:
Depends on the existing car. If the £1000 investment will make MOT, AND keep it running for another couple of years, I'd rather lend them the £1000.

Car finance in your name seems like an extreme measure for this case. As Prof says, £4k will get you far. If the existing car is really that bad, even £2000 will get you a solid 90s E Class, a ridiculously reliable 00s Civic, or anything diesel and VAG with decent history. New cars are shash...

I think the main thing is that it's possible to do it.

We'll discuss the various options (loan, HP, etc...) but we now know it's possible and all above board :D

Thanks :D
Author:  fu manchu [ Mon Feb 18, 2013 8:48 pm ]
Post subject:  Re: Is this ok (Car finance)
Registered keeper and legal owner, although often the same, doesnt have to be. The Registered keeper, that is, whoever is named on V5, is responsible for tax/road fund license and insurance etc. This doesnt have to be the 'legal owner', that is the person that has payed for or is paying for the car or finance or similar arrangement. Its on the back of the V5/log book.
Author:  Amnesia10 [ Mon Feb 18, 2013 9:25 pm ]
Post subject:  Re: Is this ok (Car finance)
I would imagine that as long as you accept liability for repayment then the vehicle could be registered to anyone. If you asked the lender they could tell you the best way of proceeding. You could alternatively buy the car in your name gift it to your parents and retain the liability for the debt. Nothing illegal about that.
Author:  jonbwfc [ Mon Feb 18, 2013 10:02 pm ]
Post subject:  Re: Is this ok (Car finance)
Fogmeister wrote:
Just had a deeper look into it and some car insurance companies will not let you insure a car that belongs to someone else.

Define 'belongs'. In this case you'd still 'own' the car, since you were paying for it. As has been said, you could be the owner and they could be the registered keeper, that's perfectly legal.

I see students all the time with cars their parents have bought for them and are paying for/have paid for. This the same deal just in the reverse direction. As long as the paperwork is in order and you haven't made any false declarations to insurance, I don't see a problem.
Author:  Fogmeister [ Mon Feb 18, 2013 10:08 pm ]
Post subject:  Re: Is this ok (Car finance)
jonbwfc wrote:
Fogmeister wrote:
Just had a deeper look into it and some car insurance companies will not let you insure a car that belongs to someone else.

Define 'belongs'.

I meant "belongs to" meaning the person who is paying for the car.

I'd definitely have to be the owner of the car in terms of tax, MOT, speeding fines, etc... They would all get sent to me.

I thought it was the case with insurance though. I had a car as a student, insured it in my name but it was "owned" by my parents.

Coolio :D
Author:  tombolt [ Tue Feb 19, 2013 12:50 am ]
Post subject:  Is this ok (Car finance)
I'd look into being a guarantor for them on a loan.
Author:  Amnesia10 [ Tue Feb 19, 2013 4:46 am ]
Post subject:  Re: Is this ok (Car finance)
jonbwfc wrote:
I see students all the time with cars their parents have bought for them and are paying for/have paid for. This the same deal just in the reverse direction. As long as the paperwork is in order and you haven't made any false declarations to insurance, I don't see a problem.

I agree. As long as you are upfront about it there should be no problems. You will have to forward parking tickets and fines to your parents. :?
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