Finance declined AFTER collecting car from dealer

Marshallj

I could do with some advice:
I recently tried to purchase a used car from a dealer, but was refused finance because I've only been in my job for 4 months. I asked the dealer if my mum could apply for the credit, they said yes. She got accepted. The dealer asked for her driving licence, I said she didn't drive. He said ok that was fine, a passport would be fine. We went in and signed everything, collected the car and went home. Two days later the finance company rings to say they have to refuse the finance because my mum doesn't have a licence.

I've been told I now have to return the vehicle today, which I'm gutted about. I've set up insurance, all the V5 paperwork has bent off for my part ex and this new vehicle. They've even paid off my settlement on the part ex! Where do I stand with this? I collected this car in good faith.

nelly12

Marshallj wrote: »

I could do with some advice:
I recently tried to purchase a used car from a dealer, but was refused finance because I've only been in my job for 4 months. I asked the dealer if my mum could apply for the credit, they said yes. She got accepted. The dealer asked for her driving licence, I said she didn't drive. He said ok that was fine, a passport would be fine. We went in and signed everything, collected the car and went home. Two days later the finance company rings to say they have to refuse the finance because my mum doesn't have a licence.

I've been told I now have to return the vehicle today, which I'm gutted about. I've set up insurance, all the V5 paperwork has bent off for my part ex and this new vehicle. They've even paid off my settlement on the part ex! Where do I stand with this? I collected this car in good faith.

Basically you must take the car back to the dealer. It is up to them to unravel this mess and put you back to the position that you were in before you collected the new car. Not sure how they'll sort out the settlement on your px though. What you have done in terms of the finance on the new car is called fronting and goes against Anti Money Laundering policy.

If you can't get the finance in your own name then perhaps you shouldn't be buying the car? It will not have been declined solely because you have only been in your job for 4 months.

Sally22_2

I thought you could get finance etc with someone elses name with their permission?

Ok it wasnt on a car but my partner had a not brilliant credit rating 3 years? ago and he wanted to buy a Nintendo Wii on credit (bad idea looking back but hey ho!) so I applied for the credit in my name but the direct debits payments came out of his account.

We also do this with his mobile phone contract, its in my name but the direct debits come out of his account with no problems, been doing it for at least 2 years.

Not sure if its the same with cars though...

Although when I bought my current car on finance 2 years ago (brand new), they wouldnt let me have the car till the finance and bank stuff had all been approved, so I think the dealer is slightly at fault here by letting you have the car prematurely?

Marshallj

I have checked my credit report and it is all green. I have had no problem in the past getting credit and have an excellent payment history. There is no issue with affordability either, so if my mum has no issue getting the finance in her name then why should you have a problem??

We were completely upfront with the dealer, this is their mistake not ours! I have never heard of 'fronting'. But having just read up on it, why would the dealer allow us to proceed if it is against the law?? We told them mum doesn't drive and that I would be driving the vehicle. And this is a major Ford dealer, not a back street garage.

System

I would say that as the person with the loan does not have the item being paid for in their ownership they see a major problem with trying to enforce it (e.g. repossession) and have therefore decided, once all the relevant facts came to light, not to proceed with the loan.

It probably wasn't mentioned to the loan company when it was initially applied for (probably over the phone) that the person taking out the loan would not be the owner of the vehicle and this only came to light when the dealer sent the paperwork through. It probably would have worked if the OP's mum had bought the vehicle in her own name

ILW

I cannot see why the mother cannot own the car?
There is no law that says you have to have a license to own a vehicle.

System

ILW wrote: »

I cannot see why the mother cannot own the car?
There is no law that says you have to have a license to own a vehicle.

I agree. I get the impression that the sale wasn't processed that way hence the problem.
Although I think that the loan company wouldn't touch this if a new loan application on that basis was now tried as they have the background info that the car is not for the person requesting the loan.

nelly12

ILW wrote: »

I cannot see why the mother cannot own the car?
There is no law that says you have to have a license to own a vehicle.

You're correct there is no law that says you have to have a licence to own a car. However there becomes an issue if there is then a loan involved and the loan is defaulted on. Basically most finance companies will only accept you if you have a driving licence to cover themselves.

There have been several cases where the judge has said to the finance company that they can't have their car back upon default because why would you finance a car for someone who can't drive! The liability then goes back to the motor dealer who allowed 'fronting' to take place.

This happens everyday and is difficult for finance companies to ever find out about because the dealers invoice the car in the correct way even though they then register the car to someone else.

Endeth the lesson for the day. Have a greeat evening everyone.

MortgageChallenge2011

Get your mum to apply for a provisional license - then she is "learning to drive" - has a license, problem solved

Foggster

I know of 2 people who have had cars purchased for them using finance (I have just checked with the one person now) because they are carers for their elderly relatives. The relatives pay the finance and the friends have the car but are available to drive the relatives around. My one friend confirmed that her Vauxhall was purchased by her mother and the finance is in the mothers name as well as the log book but she doesnt have a driving licence. Surely in the event of a default the car could be siezed in the same way a car can be reclaimed back if it has been sold on with finance attached to it? Holding a licence seems an odd reason to refuse finance.

tara1082

I suggest get some legal advice. If you have to take the car back then you should be in the same situation as you where before you took delivery of the financed car. This is up to the dealer to sort out as they have made the problems.