“Can I take out car finance in my name if the car is for someone else?” Asked by Bradley on The Car Expert forum. It’s a question we get asked a lot.
“Is it possible to have more than one car finance agreement in my name? I have a PCP for my car and I want to start another one for my girlfriend’s car as she can’t get finance approved. But the dealer said I can’t do that. If I can afford it, why not?” asks Bradley.
We have looked at different types of car finance before at The Car Expert, especially the most popular type of agreement – the personal contract purchase. But there is one assumption in any car finance application – that the person applying for car finance is the owner, keeper and main driver of the vehicle. Bradley’s question is a common one when people are applying for car finance, and it causes considerable confusion.
If you have a poor credit score or credit history and you can’t get car finance approval, it seems simple enough to ask someone else (usually a spouse/partner/parent/close friend) to take the finance in their name, while you promise to pay them for the monthly payments so they’re not out of pocket.
Car finance – the Accommodation Deal
The problem is that you generally can’t do it. Taking out car finance for someone else is known as an Accommodation Deal, and the finance companies simply won’t touch it, despite the concept not actually being illegal. So what exactly is the problem?
If you are unable to get finance, it is because the finance company has decided that you are too high a risk to loan money to. For whatever reason, be it failing to pay previous bills or not enough evidence of suitable income, the finance company has decided it does not believe that you can or will repay their loan.
So if they won’t lend to you, they are not going to lend money to someone else who is applying on your behalf, and who is expecting you to pay them for the loan. You are trying to circumvent your inability to get car finance by having someone else get it for you, and the finance companies are not stupid.
An Accommodation Deal is considered too risky
The logic is simple: the finance company does not expect you to be able to repay the loan to them, so they don’t expect you to be able to repay the same amount of money to another person.
The person responsible for repaying the loan does not have possession of the vehicle (because you have it), which leaves the finance company at greater risk of not getting its money back and not getting the car back.
If you are declined car finance, then the finance company will not approve a similar application from anyone at the same address. They will also not approve anyone else they suspect trying to be applying for finance on your behalf as an accommodation deal.
Your credit score will be marked accordingly, which means other finance companies will almost certainly reject your finance application as well.
Don’t rely on what a car dealer tells you
Car dealers often don’t help matters by tacitly accepting and assisting with accommodation deal applications, rather than simply rejecting them outright. This also puts them in a dangerous position with the finance companies providing the loans.
The terms and conditions of the finance contract will be very clear regarding an accommodation deal, so even if a car salesman tells you that it’s fine, he will be able to deny it all later while you’re the one left in a big financial mess.
If you complain to the finance company, the salesman will swear blind that you lied to him and there’s no way he would have submitted your loan application if he knew the truth. And there will be nothing written down, so you can’t prove anything.
Don’t commit fraud so someone else can drive a new car!
Whilst the concept of an accommodation deal is not illegal, the concept of fraud most certainly is. Finance companies have become very sensitive to accommodation deal agreements in recent years, and they are on the lookout for any applications which may be considered such.
Usually, as part of the terms and conditions of your finance contract, you will have to declare that you will be the registered owner and keeper of the vehicle, and that you are the main driver.
If you are applying for finance on behalf of someone else, and you do not intend to be the primary user of the vehicle, you will be lying to the finance company and that is considered fraud. In such circumstances, both persons involved (the one unable to get finance and the one applying for it on their behalf) would be committing fraud by attempting to deceive the finance company.
If someone asks you to apply for car finance on their behalf, the correct answer is NO. In addition to the legal issues surrounding an accommodation deal as outlined above, money issues tend to destroy friendships and relationships.
Most car finance agreements in the UK are regulated by the Financial Conduct Authority, and anyone involved in the selling of car finance must be accredited by the FCA.
You should always consider the terms and conditions of any agreement carefully before taking out any form of car finance, as you are making a substantial ongoing commitment. There may be significant costs if you change your mind or are unable to meet your commitments at a later date.
This article was originally written in January 2014, and has been substantially updated and improved in January 2018.