Loan to friend: car as collateral

Mohitsethi

I'm minded to loan £1000 to a friend, not my closest but more than an acquaintance, to buy a car. Previously I've loaned smaller amounts, c£200, and have always been repaid but never on time and never without some small hassle. Having said that, in the scheme of things, I've never fallen out with said friend as he's always come good and has never been seriously late in repaying. He's just been a bit tardy and I trust him to repay.
But £1000 is a much bigger sum of money, and although I could afford to lose it, not getting repaid or having to spend a lot of time chasing payment would seriously mess up the friendship.
My question is, could or should I demand that the car purchased with the loan be put up as collateral for the money lent?
For example, could or should I buy the car in my name and only transfer ownership once the loan has been repaid?
I'm not a driver or car owner so I'm not familiar with the legal situation regarding owning a car that someone else drives... Eg if they're involved in an accident or do something illegal in the car whilst I still own it how would it affect me?
Grateful for any advice.

CKhalvashi

If you do go ahead with it, as although I wouldn't personally recommend it, it's ultimately your choice:

For insurance, the car would probably have to be registered to him, with a separate agreement that if he defaults, you will have permission to take and sell the car, have a spare set of keys etc.

If you don't have a driving license, you mustn't drive it, and you must insure yourself on the vehicle if you do have.

Someone will probably give some better advice on the legals of it, as without a limited company being involved in the ownership of the car (as is the case with leasing companies etc), I don't know if it's the same situation as an individual.

worried_jim

This will end in tears.

Money_maker

Why go there? You say your friend is slow in repaying and hassle. Having borrowed smaller amounts off you, this must show you they have not learnt how to handle their money.

Why do you want your fingers burnt?

dealer_wins

Only lend the money if you think of it as a gift to a friend.

If he pays you back like a true friend would then great. If he doesnt pay you back then you wont be upset as you never expected to be repaid.

warehouse

Are you seriously considering loaning more money to someone who's already shown signs of being unreliable? Have you got mug written on your forehead?

Don't do it.

WellKnownSid

There are many problems with this plan.

Firstly, the responsibilities for car owners and keepers are significant - including maintaining tax and insurance, MoTs, as well as things like parking fines, road traffic offences, etc. Things that you don't know about as a non-driver. Police understand the more typical situations where the owner and keeper are different - like company cars, hire cars, lease cars or where the husband is using the wife's car. The lines here are a lot more fuzzy - you already know they don't pay on time, you've mentioned a worry about them doing something illegal, maybe you even suspect them driving with no insurance. The police may believe this too and consider you the one responsible if they're ever stopped for no insurance.

Secondly, collateral - what collateral? A £1,000 car is going to be worth no more than about £150 if you needed to sell it in a hurry (assuming it was in good condition, AND you had all the keys and the paperwork - which you probably won't have).

Thirdly, and finally... a large percentage of posts on here are from friends and families who've come unstuck. Plenty of relationships get destroyed over money. It's not for nothing that people are telling you don't do it!

fishybusiness

If you want to lend the money, accept you may not have it returned on the terms of your agreement, and as someone else has said, expect you may not receive it.

If that makes you uncomfortable don't lend it.

Forget about the actual car, having security etc, it muddles up the thinking.

MEM62

If you read any of the threads on here on the subject of lending money to friends you would not even be asking question.

antenna

What's in it for you?...............there must be more to this than you are telling.

poppasmurf_bewdley

There is a reason he needs to borrow money off you instead of going to a normal place of business to get a loan.

And that reason is he has a poor credit rating, and no other mug will lend to him.

Don't you be that other mug!