Applying for car finance such as Hire Purchase or PCP on behalf of someone else, also known as fronting, is fraud.

Finance companies try to spot such cases at the time of application and will decline any they identify.

Poor credit history, thin credit file or lack of evidence of suitable income are the common reasons why car finance applications may not be approved.

Despite seeming like a simple solution, car buyers are advised not to ask someone else to take car finance out in their name. It is a significant risk for the person who applies for car finance as they could be added to the fraud database, as well as being financially liable if payments are not made.

There are exceptions where lenders will usually allow a spouse or partner to take out the finance if the car will be used by both parties. Some lenders will permit a parent to obtain finance for their child.

However, the person who takes the finance will need to be the registered keeper of the vehicle. Some lenders also require the borrower to be the main driver. This will be included in the terms and conditions of the loan agreement signed.

Taking car finance out for someone else, also known as an Accommodation Deal, is a high risk for a lender, since if for any reason the borrower did not make payments and they sought to repossess the vehicle, they would not be able to do so.

There are two main alternatives to consider.

A personal loan or unsecured borrowing can be used for any purpose and therefore if you have considered the risks but still wish to buy a car for someone else this would be an option.

However, you should consider whether you will be able to afford the loan if the other party stops paying, and also consider the impact on your future ability to borrow. Any lenders will consider the loan repayments your responsibility and therefore they will be included in any affordability calculations for further loans or mortgages.

Sub-prime loans or guarantor loans whilst they may have a higher interest rate, they do have the advantage that if payments are made on time it will positively impact your credit record. The lender will assess the applicant for affordability.

If you are unsure about the best way forward for you, give our customer service team a call  on 01325 978080 and we can discuss your specific circumstances to find the most appropriate loan product.


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