Taking a PCP out but car will be for daughter to drive?

sunnyshiney

Hi,
We are looking at taking out PCP finance to get our daughter a car.  If we take out the finance, is it the owner or the keeper of the car (or both) that we have to be? Also, what happens with regards to insuring the car - can she insure it and get NCBs?
Any guidance greatly appreciated!

WellKnownSid

As you may have figured out, this is a convoluted way to buy a car and you should ask yourself whether it's a good idea.

You won't own the car, that will be the finance company.  You will be the registered keeper.  Your daughter will have to take out an insurance policy which covers her as main driver for a car where she is not the registered keeper - this might limit her options and result in a bigger bill.  It sounds like you won't be insuring the car you're supposed to be responsible for.

As much as you might feel you are helping your daughter out - this could unravel very easily.

motorguy

i think the finance company will have a major issue with this.  They can check whos insuring the car.

Its known as fronting and is a big no no.

https://www.moneybarn.com/how-it-works/faqs/the-application-process/your-application/can-you-finance-a-car-for-someone-else/#:~:text=If you have bad credit,finance a car for you.

DullGreyGuy

motorguy said:

i think the finance company will have a major issue with this.  They can check whos insuring the car.

Its known as fronting and is a big no no.

The OP has asked if the insurance can be in the daughter's name, which is the exact opposite of fronting. 


First of all, speak to the finance company, some are happy with the person taking the credit and the person "owning" the car being different people and others aren't. Certainly it would be easiest if the finance was happy that you're just bankrolling her and it's her car. 


She can insure the car herself but needs to be very careful that she correctly declares who the owner is and who the registered keeper is. It's likely the Finance company is the owner and you are the registered keeper - there is a thread here on someone who "forgot" how they'd got their car and has had their policy voided on a large accident for false declaration. Some insurers wont like the arrangement and so wont quote but plenty will be ok with it. 

If she is the policyholder and main driver she will be the one earning the NCD

chrisw

Also bear in mind that if she's a newly qualified driver, they usually end up with a few dings and scrapes where something like a gatepost has jumped out at them. 

Annoying but can be lived with on a 10 year old Fiat, but will require quite a bit of expense before returning the car on a PCP.

motorguy

DullGreyGuy said:

motorguy said:

i think the finance company will have a major issue with this.  They can check whos insuring the car.

Its known as fronting and is a big no no.

The OP has asked if the insurance can be in the daughter's name, which is the exact opposite of fronting. 


First of all, speak to the finance company, some are happy with the person taking the credit and the person "owning" the car being different people and others aren't. Certainly it would be easiest if the finance was happy that you're just bankrolling her and it's her car. 


She can insure the car herself but needs to be very careful that she correctly declares who the owner is and who the registered keeper is. It's likely the Finance company is the owner and you are the registered keeper - there is a thread here on someone who "forgot" how they'd got their car and has had their policy voided on a large accident for false declaration. Some insurers wont like the arrangement and so wont quote but plenty will be ok with it. 

If she is the policyholder and main driver she will be the one earning the NCD

Fronting in this context is - In car finance terms, fronting is a fraudulent act that occurs when one person takes out a Credit Agreement on behalf of another

 You didnt read the article i linked to then?

Can you finance a car for someone else?

You might be wondering if you can apply for car finance on behalf of someone else, like a family member or someone you live with.

Applying for car finance for someone else is known as ‘fronting’, which is illegal. It is also illegal for someone else to finance a car for you.

Keep reading to learn exactly why you can’t finance a car for somebody else, and the options you might want to consider if you’re looking for a car finance agreement.

What is accommodation finance?

You may have heard of ‘accommodation finance’, which is a term used for taking out finance for somebody else in your name. You might also know this as ‘fronting’, and it is illegal because it is a form of fraud.

Being found guilty of fronting could have serious consequences.

born_again

Why not just give her the money to pay the costs. Allows her to gain some credit history & means at the end she is going to be liable for any excess charges.

DullGreyGuy

motorguy said:

DullGreyGuy said:

motorguy said:

i think the finance company will have a major issue with this.  They can check whos insuring the car.

Its known as fronting and is a big no no.

The OP has asked if the insurance can be in the daughter's name, which is the exact opposite of fronting. 


First of all, speak to the finance company, some are happy with the person taking the credit and the person "owning" the car being different people and others aren't. Certainly it would be easiest if the finance was happy that you're just bankrolling her and it's her car. 


She can insure the car herself but needs to be very careful that she correctly declares who the owner is and who the registered keeper is. It's likely the Finance company is the owner and you are the registered keeper - there is a thread here on someone who "forgot" how they'd got their car and has had their policy voided on a large accident for false declaration. Some insurers wont like the arrangement and so wont quote but plenty will be ok with it. 

If she is the policyholder and main driver she will be the one earning the NCD

Fronting in this context is - In car finance terms, fronting is a fraudulent act that occurs when one person takes out a Credit Agreement on behalf of another

 You didnt read the article i linked to then?

Nope, my bad, in this sort of context we also talk about insurance fronting when a high risk main driver names a low risk person as the policyholder and main driver to artificially lower their premiums. 

As an aside, when getting a PCP deal I cannot remember being asked who the main user of the vehicle is going to be. If it's going to be treated as fraud you'd expect the FCA wanting it to be very clear. Certainly for non-car financing credit I've taken credit for the benefit of others and equally it's never been asked who the beneficiary of the monies is. 

I am aware that some finance companies aren't happy with one person taking the credit and a second being the main user/keeper but I'd assume such companies asked direct questions to identify such cases.

sunnyshiney

Thank you all very much for your time.

She's been driving for 3 years now and is selling her 13 year old Fiat (yes, with it's dinks and dents 🤦🏼‍♀️) to put towards the deposit for another car and we thought rather than spend, say £10,000 for a second hand car, which may or may not need money spent on it, if we could get a new car, then once she's finished uni and got a job, she can decide what to do with it at the end of the finance term. 

We are certainly not wanting to go down the 'fronting' route and will be upfront and honest if we decide to go with finance. Just wondered regarding her car insurance. 

ontheroad1970

Advice has been given regarding the insurance above.  Insurance co's ask who the registered keeper is, and who the main driver will be.  The complication in this instance is in cases of a write off that doesn't clear the finance while it is in your daughter's care.  If the finance company is unaware that a car that is secured to you via a loan, they might be upset.  The question is whether a car salesman needing to fulfil his monthly targets is prepared to risk a guaranteed sale by contacting the finance company and asking the question.  You'd hope that they would, but how sure are you that they would.

One always hopes that during the keeping of the car that there are no incidents, like a collision that writes off the car, or a theft.  There are GAP insurances also, but you'd have to check that they would cover in this instance.