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Who is the legal owner of a car on finance? Whether you’re thinking of getting your next vehicle on finance or already do, the question of ownership often creeps up. 


Registered Keeper vs Legal Owner

The confusion typically stems from the difference between being a registered keeper vs a legal owner. If you drive a car every day, pay for the insurance, and are responsible for its upkeep, it’s easy to feel like you own it. However, if the car is in a financial plan and you are still making payments, then you are the registered keeper. Car finance can’t be transferred to another person even if the legal owner title sits with you. 

How to check?

The V5 registration form provided will state whether you are the registered keeper or legal owner. You can always contact your finance company for clarification.

Why does it matter?

As you’re not the legal owner you can not do with the car what you wish. If you’re thinking of modifying a car on finance, you can run into legal trouble and breach the terms of your agreement. Should you fail to make your repayments, the finance company can take the car from you as collateral. 

reading car finance agreement

Who is the legal owner of a Hire Purchase car finance agreement? 

Many people taking a vehicle out on an HP finance deal presume they are the legal owner. Unlike PCP, people in these plans intend on keeping the car at the end of the agreement. However, until all payments are made, including the ‘option to purchase’ fee, you remain the registered keeper only. The car finance lender that provided the finance for you is the legal owner. 

Once all payments are paid, ownership will transfer to you providing you legal rights over the car. 

Who is the legal owner of a PCP car finance agreement? 

Whilst paying for a car in a PCP finance deal, you are also not the legal owner. If you intend to hand it back, this is unlikely to bother you. If you want legal ownership you must pay the car finance lender a final fee, often referred to as a balloon payment. Many refinance the balloon payment, allowing them to pay the first lender and become the legal owner, breaking down the final cost into manageable repayments. 

Does a car need to be insured if you’re not the legal owner?

The responsibility of insuring a car falls on the registered keeper. Failing to do so is illegal. As car finance is incredibly popular here in the UK, insurance companies are very used to dealing with insurance applications from registered keepers. Whatever you do, do not presume the finance company or car dealership will sort this out for you. 

girl holding car documents

All summed up, you are not the legal owner of a vehicle until all repayments have been made.

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