Car on Finance: Who is the Legal Owner of a Financed Car?

You may have chosen your perfect car and might be confused about who is the legal owner of a car on finance. The answer isn’t always straightforward. The simple truth is that the finance company remains the legal owner until the final payment has been settled.

In this guide, we will explain who owns a car on PCP, HP, PCH and a personal loan agreement. At the end, you will know exactly who holds legal ownership.

Key Takeaways: Who is the Legal Owner of a Car on Finance?

On finance, the legal owner is usually the lender, the registered keeper handles tax and insurance, and ownership rules vary by PCP, HP, PCH, or personal loan agreements.

• The finance company is usually the legal owner until all payments are complete.
• The registered keeper is responsible for tax, insurance, and MOTs but may not own the car.
• PCP: Ownership transfers after the final balloon payment.
• HP: Ownership transfers after the last payment and a small option-to-purchase fee.
• PCH / Leasing: You never own the car; it must be returned.
• Personal Loan: You own the car outright from day one.
• You cannot sell or make major changes until you legally own the car; always check your finance agreement.

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Legal Owner vs. Registered Keeper: What’s the Difference?

These are the terms that you should understand: legal owner and registered keeper. Both terms are not the same.

Legal Owner: The legal owner is the person or company that holds the true financial title to the car. They are the ones who paid the dealership for the car. And they retain that ownership right as collateral until your debt is completely settled.

Their rights include:

• Authorising major modifications (you often need permission).
• Preventing the sale or transfer of the vehicle.
• The legal right to repossess the car if you default on payments

Registered Keeper: The registered keeper is the person who is responsible for the car’s day-to-day life and compliance with the law. Your name will be listed on the V5C logbook as the registered keeper.

Your responsibilities include:

• Road tax of a vehicle 
• Arranging and paying for the MOT when the car is over three years old.
• Getting the necessary insurance.
• Paying any speeding fines or parking tickets.

Who Owns the Car on Each Type of Finance?

The ownership depends on the type of finance agreement you have. Here is a simple breakdown.

1. PCP (Personal Contract Purchase)

Under the PCP agreement, the finance company is the legal owner until you pay the final “balloon” payment. It works in such a way that you pay monthly instalments, then have the option to pay a final lump sum to own the car, return it, or trade it in.

Actually, you are effectively paying off the car’s depreciation over the term, not the full price.

2. HP (Hire Purchase)

HP is structured so that you are essentially hiring the car for the duration of the contract. The company is the legal owner until you make the final regular monthly payment and pay a small, nominal “option to purchase” fee. 

3. PCH (Personal Contract Hire / Leasing)

With PCH, or leasing, there is no intention for you to ever own the car. It is a long-term rental. The finance company or leasing provider is the owner, and you are usually the registered keeper. When the contract ends, you simply return the vehicle.

4. Personal Loan

In a personal loan, you are the legal owner and registered keeper of the vehicle because you buy the car outright using borrowed money. The loan is unsecured against the vehicle, so the bank doesn’t have a direct claim on the car itself. It’s only up to you to pay back the borrowed cash.

Comparison Table: Who Owns the Car on Each Type of Finance? (PCP vs HP vs PCH)

The legal ownership of a car on finance varies by finance type, and here’s how to distinguish between them:

Can I Sell the Car if I’m Not the Legal Owner?

The short answer is No. You can’t legally sell without settling the finances first. Even though you might be the registered keeper but the company is the legal owner. 

However, there are three ways you can sell your car:

1. Get a Settlement Figure: Contact your finance provider and ask for the settlement figure. This is the exact amount you must pay to end the contract and take full legal ownership.
2. Pay Off the Balance: You must pay this figure off. You can either pay it yourself using savings or, more commonly, use the money from the sale to pay the lender directly.
3. Transfer Ownership: Once the lender confirms the balance is cleared, the legal title is transferred to you, and you are then free to sell the car to a private buyer or dealer.

How to check the DVLA registered keeper?

The registered keeper is the person responsible for a car according to the DVLA. There are different ways to check this depending on the type of information you need.

1. To Find Personal Keeper Information

If you need the name and address of a registered keeper:

• Submit form V888/2A to the DVLA: You must explain why you need the information.
• Provide a valid reason: The DVLA will only share personal details if you have a legitimate reason. Such as tracing a vehicle involved in an accident, a hit-and-run, or damage where the driver left without paying.

2. Getting the Car’s History

If you just need general details, like the number of previous keepers or the car’s history:

• Check the V5C logbook: The front page lists the number of previous registered keepers.
• Use a paid car history check service: Services like HPI checks provide a full report on the vehicle’s history, including previous keepers, outstanding finance, and mileage records.

What You Can and Can’t Do When the Car Is on Finance

Being the registered keeper gives you certain responsibilities and rights, but legal ownership limits what you can do. Here’s a simple guide.

What can you do?

• You can use and drive the car.
• You can maintain and service the vehicle.
• You can voluntarily terminate, but you need to pay at least 50% of the total finance.
• You can trade it in.

What can’t you do?

• You can’t sell the car privately.
• You can’t scrap the car or export it.
• You can’t make major modifications. 

Frequently Asked Questions

Can the registered keeper be different from the finance applicant?

Yes, the registered keeper can be different from the finance applicant, but it’s crucial to inform the lender beforehand. For example, parents taking out a car on finance for a child, where the parents are applicants and the child is the registered keeper.

What Happens at the End of the Finance Agreement?

It depends on the type of finance: 

1. PCP: You have three choices that pay the balloon payment to own it, part-exchange it for a new car, or return it. 
2. HP: Once all payments are made, ownership automatically transfers to you.
3. PCH/Leasing: You must return the car to the leasing company. There is no option to buy.

Does the V5C prove ownership?

No. The V5C logbook only shows the registered keeper, not the legal owner. However, the legal owner is the person or company that has the financial title to the car. If the car is on finance, the V5C will say one thing (your name), but the HPI check will confirm the true legal owner.

What happens if I stop paying?

If you stop paying your finance agreement, the lender may repossess the car even if you are the registered keeper. And you could face additional charges, interest, and a negative impact on your credit score.

Can you insure a car you don’t own?

Yes, you must insure your car even if the finance company is the legal owner. Most insurance policies will cover you, but the finance company may require you to list them as a co-insured party. 

Wrapping Up: Who is the Legal Owner of a Car on Finance

By now, you may understand the difference between the legal owner and the registered keeper. A person can be a registered keeper but not a legal owner of a car, and a legal owner can be a registered keeper. That said, the finance companies are usually the legal owners of the vehicle on finance.

Understanding the terms and conditions before making a commitment is crucial.