Can I finance a car for someone else to drive?
Yes, you can finance a car for someone else to drive, but there are a few important considerations:
- The Finance Agreement:
- The person applying for the finance (you) will be the legal owner of the car until the loan is fully repaid.
- You will be responsible for making the monthly payments, regardless of who uses the car.
- Driver’s Insurance:
- The individual driving the car must be properly insured to do so.
- Some lenders may require the primary driver to be listed on the finance agreement or have their insurance tied to the car.
- Lender’s Policy:
- Some finance providers might restrict who can be the primary driver. For example, certain agreements may require the financed vehicle to be for your personal use.
- It’s important to check with the lender if they permit someone else to drive the car regularly.
- Guarantor Option:
- If the person who will drive the car cannot qualify for financing on their own, you could act as a guarantor instead. This allows the car to be in their name while you provide financial backing.
- Considerations and Risks:
- If the person driving the car stops contributing to payments (if agreed informally), you are still legally obligated to pay the loan.
- Defaulting on payments will affect your credit score, not theirs.
Before proceeding, it’s wise to review the terms of the finance agreement carefully and ensure clear communication with the other person regarding responsibilities.