Who is the legal owner of a car on finance?
When you take out car finance, it’s important to understand that being the registered keeper of a vehicle and being the legal owner are two different things.
In most cases, the finance company is the legal owner until the finance is fully settled, but you’ll be the registered keeper.
But what does that mean exactly? It can be a bit confusing, but understanding who is the legal owner of a car on finance is important. So, to clear up any questions, we’ve explained how it all works.
What is the difference between a car’s owner and a registered keeper?
A car’s owner and registered keeper can sometimes be the same person, but that’s not usually the case with car finance. When you buy a vehicle on finance, you don’t legally own it until all payments have been made. Here’s how the two roles differ:
Legal owner: This is usually the finance company for the duration of the loan. They hold the legal rights to the car, so you can’t sell or make major changes without their consent.
Registered keeper: This is the person named on the V5C logbook who uses the car day to day. They’re responsible for tax, MOT, insurance, and keeping the vehicle roadworthy.
What does registered keeper mean?
So, who is the registered keeper of a car on finance? In most cases, it’s the person taking out the finance agreement. Their name appears on the V5C logbook, and they’re responsible for the car’s tax, insurance, and upkeep while making monthly payments.
But it's really important to understand that being the registered keeper doesn’t make you the legal owner. The finance company remains the legal owner until the final payment (and any fees) have been made. Only once the agreement is settled does ownership officially transfer to you.
Who is the legal owner of a car on Personal Contract Purchase (PCP)?
With a PCP agreement, the finance company is the legal owner of the car until all payments are made. And if you’re wondering who is the registered keeper of a PCP car, it’s the person taking out the finance deal.
If you opt for PCP, you’ll only switch to the legal owner if you decide to pay the balloon payment to keep the car at the end of the agreement.
Who is the legal owner of a car on Hire Purchase (HP)
With a HP agreement, you’ll also be the registered keeper during the agreement, and the finance company is the legal owner until you’ve made all the payments.
But unlike a PCP agreement, there’s no large balloon payment at the end. You automatically become the owner at the end of the loan term (or sometimes will have to pay a small ‘option to purchase’ fee).
Who is the legal owner of a car on a bad credit finance agreement?
If you take out bad credit car finance, things work just the same as any other type of finance deal. You’ll be the registered keeper, responsible for looking after the car day to day, but you won’t legally own it until the finance is settled.
Once you’ve finished your repayments, ownership officially passes to you, and you’re free to keep, sell, or part exchange the car.
Can the registered keeper of a car on finance be changed?
You usually can’t change who the registered keeper of a car is while it’s still on finance. This is because the agreement is set up using your personal details, so the car has to stay in your name until the contract ends and you’ve officially become the owner.
If you no longer want to keep the car, you could consider voluntary termination of your car finance agreement or look to see if you could pay off your car finance early instead.
Can the registered keeper sell a car on finance?
The registered keeper of a car on finance can’t sell it until the finance has been fully settled. This is because the finance company is the legal owner until the agreement is paid off.
If you’re thinking about selling a car on finance, you’ll need to settle the finance first. To find out if this is possible, check your contract and speak to your lender.
The takeaway
Understanding who is the legal owner of a car on finance and how that differs to registered keeper is important, especially in car finance.
Remember, you’ll usually be the registered keeper and responsible for the day-to-day running of the vehicle. But, the finance company remains the legal owner until the agreement is fully paid off.
For more handy tips, including what happens if you crash a car on finance and what to do if you have a problem with a car bought from a dealer, head to our guides and blogs.