Can I buy a car on finance for my son/daughter?
When it comes to your son or daughter getting their first car, it's a big milestone, but they may not be in a financial position to do it on their own. They may be a full time student, or have only just started their first job but need their car to commute around. As a parent, you want to help them get on the road, but is it possible for you to do so?
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Can you take out car finance for someone else?
Taking out car finance on behalf of someone else, also known as ‘fronting’ or an ‘accomodation deal’, is considered fraud. This applies no matter which type of car finance product you're looking at taking out, from personal contract purchase to hire purchase.
This is because the reason you’d be taking out finance on behalf of someone else, is likely because they haven’t been or can’t be accepted. This may be due to the fact they don’t have a credit history, or they have a poor credit score. And just because you’re taking the agreement out in their name, doesn’t mean they’ll make repayments on time and as a result you could become financially liable.
What are the alternatives?
There are some finance lenders out there that do make exceptions and will allow parents to obtain car finance for their child.
Often, this will be the case if both you and your child will be using the car. You’ll need to be the registered keeper of the car and have your child listed as a named driver. This will all be stipulated in your individual car finance agreement though, so make sure you read through this thoroughly.
You can also consider taking out a guarantor loan for your child. A guarantor is someone the monthly car payments fall back to if they aren’t paid on time. With this though, you do need to consider whether you’ll have enough money to repay the loan if this is the case. While these types of loans may have higher interest rates, they are good for improving your credit score.
Lastly, you can consider setting up a direct debit into your child's bank account to help them with repaying the car finance loan. Of course, this doesn’t guarantee your child will be accepted, as this will more be decided based on their credit history, but it is helpful if you want to help them along the way.
Contact Hilton Garage about financing a car for your child
At Hilton Garage we have over 45 years experience in the car industry, and with car finance, so we can help talk through the options available to you if you’re looking at financing your child’s next car.
As a car finance broker, this means we have partnerships with various car finance lenders who offer different types of car finance for different circumstances, including if you want to take out finance for your child on their next car.
Contact us at Hilton Garage today to find out more.