Taking Out Car Loan For Someone Else

[buffymad]

My friend has a bad credit scoring from years ago - fine with money now but obviously the bad scoring remains which means he can't get loans etc. She's after a car which she'd be paying the loan repayments on, insurance, tax etc etc, but is thinking of asking her boyfriend to take out the loan in his name. She asked if I knew anything about this through working in law (nope, I deal with different things!) and that's why I'm on here.

Are you actually allowed to do that? Would the car be shown as her car rather than her b/f's? What happens in future if there's any problems, ie can the loan be transferred into her name or will the bad credit history stop that again? If she defaulted on a payment, would it all come back on her b/f?

Help!!

[CheekyChops]

Its a very stupid idea that is likely to end in tears.

If she can't get a loan in her own name now then she is unlikely to be able to swap it into her own name at a later date. If she defaulted or made any payments late, she would be trashing her BF's credit rating and he could have debt collectors after him.

What happens if they split up? He could potentially be left paying a loan when she has the car.

[factor-fiction]

I agree with everything CheekyChops says. There have been queries on here before about when these cases have gone badly wrong

[woofgang]

essentially he would be taking out the loan and would own the car. any arrangement whereby she paid him back would be a private one. if she is fine with money now and the troubles were years ago, i am surprised that some of her bad rating at least hasn't been wiped off and that she can't get a loan anywhere. if i were her bf, i wouldn't do it, unless he is mega rich and can afford to give her the car.

[buffymad]

Thank you, you've all basically confirmed what I thought - bad idea!! I did think it could affect his credit rating if anything happened too. Think I'll tell her bad idea to ask him!!

[andy-hughes]

Bad credit score ratings can be given for a variety of reasons.

My youngest daughter has had a medium / bad score because she has just changed jobs, she is in rented accomodation, and she has no other loans or credit cards, use of which builds up a credit profile.

So this lady's score may be low for a variety of reasons which do not relfect as badly on her as you may imagine.

That said, she shouold contact Experia or similar, and have a chat about the background to her credit worthiness, and then go from there.

I think a loan in the name of a boyfriend is a bad idea, for the reasons explained.

[boxtops]

It's a bad idea. If she can't (or won't) pay back the money, the boyfriend's lumbered with the loan and possibly with a car he doesn't want or need. If it's his car, there are insurance implications if she's driving someone else's car.

She'd be better off either talking to her bank, or getting a credit cheque from someone like Expedia (really cheap) and seeing what still showing on her credit record which is still causing her problems.

[woofgang]

boxy, insurance is a different issue, I assumed that she would take out her own insurance and she doesn't have to own the car to do so.

[themas]

Who owns the car depends on the type of loan. If it is hire purchase the finance company owns it until all payments have been made (& can re-possess it in certain circumstances), & it is then transferred to the person who had the HP agreement.

If it is some other form of bank/building society etc. loan then ownership is generally irrelevant so far as the lender is concerned - i.e. the loan is not secured on the car & the lender cannot re-possess the car if payments fall behind.

There are also some types of loan which seem to be a sort of half way house where the car is secured against the loan but it is not HP. I think this depends on who the lender is.

If she goes ahead with this & b/f agrees to do it then if she stops paying the instalments his credit record is affected. His only redress would be to take Court action against her for the money she had agreed with him she would pay. That would muck up her credit rating as well.

Definitely not a good idea.

[Peter Pedant]

B who has a bad credit record is gonna ask G who has a good credit record to take out a loan because G can get one and it would be cheaper.

If that is the case....

B is onto a good one - as B can default again and nothing happens to B

G is a damn+d fool all of whose friends will say I told you so more than once and when it goes sour, will soon have a bad credit record.

The choice is theirs.

[buffymad]

PP - exactly!! I told her it was a bad idea for all the reasons everyone has given - but she still asked him and he said no anyway! Good for him ...