Can someone else drive my financed car?

Can someone else drive my financed car?

Providing that the other person has a full clean driving licence and that the appropriate insurance is in place, then yes – another person can drive your financed car. Read on for the must-know rules.

Can I let someone else drive my financed car?

Yes, you can! As long as:

  1. The other person holds a valid driving licence

  2. They have permission from you, and the company named on the finance agreement if necessary

  3. They are named on your insurance policy

  4. If required, that they themselves have comprehensive insurance to drive a financed car that’s not in their name

Don’t forget that whoever drives the car, if it’s financed in your name, then you will be liable for any repairs incurred by damage caused by another driver.

Main types of car insurance in the UK

There are three main kinds of car insurance policies here in the UK, each providing varying levels of cover at differing costs.

Third-party insurance – this is the minimum level you must have to legally drive in the UK. It provides cover to third parties (ie. any other person involved in an insurance claim who is not you) in the event of an accident you are involved in. Damage to your car or to your person won’t be covered though, and you’ll have to pay for any repairs yourself. Traditionally this was the go-to policy of choice for new, cash-strapped young drivers as it used to be the most affordable way to get insured, but surprisingly, today it can often be more expensive than comprehensive insurance, because of high claim rates.

Third-party fire and theft – this type of policy offers the same third-party cover as above, but it will also pay out if your vehicle is stolen, damaged after a break in, or damaged by fire.

Fully comprehensive – also known as comprehensive car insurance, this is the gold standard of insurance cover. This kind of policy will cover the cost of damage to your car, regardless of who is at fault. Whether you damage your car or someone else’s, or you or a third party are injured in a collision, your insurance will cover you. Surprisingly, this is often the cheapest option nowadays and is the most popular kind of cover.

While you are entitled to allow another person to drive your financed car, the devil is in the detail. Make sure you are familiar with the terms and conditions (Ts and Cs) of both your finance and insurance policies to be clear on exactly what you are permitted to do – and what not to do!

Does the main driver have to be the policy holder?

Essentially, yes – usually you, as the car finance agreement policy holder and registered keeper, must be named as the main driver on the insurance policy.

But you can add named drivers to your policy so that they can legally drive the car too. For example, if you are the main driver but your partner or child would like to drive it occasionally, you can usually add them to your policy as a ‘named driver’.

Be aware that adding named drivers to your policy will impact your monthly premiums.

Do I need permission to insure someone on my car?

Not always, but this will depend on the type of finance you have. If you took out an unsecured personal loan (UPL) to purchase your car, you are both the owner and the registered keeper, so you don’t need permission from the finance company. The other driver just needs permission from you, providing they are adequately insured, and that they are a named driver on your insurance policy.

If you have a hire purchase (HP) or personal contract purchase (PCP) finance arrangement, the finance company is the legal owner of the car (until you have paid off your loan in full) and you are the registered keeper. In this case, usually you’ll need permission from the finance provider to insure another person on the vehicle.

In both scenarios, you can usually insure another person to drive the car, providing they meet the requirements covered above and detailed in the insurance policy Ts and Cs.

Always read carefully through the Ts and Cs of your finance arrangement before allowing another person to drive your car. There may be age restrictions and other caveats. Make sure that any other drivers are named on your insurance, and that they have insurance themselves if required. If in doubt, always check with the finance provider.

Can I sublease my car if it’s financed?

When it comes to subleasing a financed car, in most cases it’s illegal. You will not be permitted to sublease, rent out or loan your financed car to another person for a fee.

This is because HP, PCP or hire contract lease (HCL) are all hire arrangements of one sort or another, meaning that the vehicle is owned by the lender for the duration of your contract. You cannot sublease a car you don’t own outright.

Of course, lending your car to a trusted friend for the day is a different thing if it’s in line with the terms and conditions of the finance agreement. It is possible to get temporary insurance cover to enable another person to use your car for a short period of time, but you need to make sure this is allowed by both your finance provider and insurer. To be clear, doing so for any financial gain is often forbidden.

If you took out a UPL to buy your car, then you own it from the moment you buy it. In this case, you may be able to sublease the car providing that you continue to make all your loan repayments according to the contract details.  

As ever, always refer to the Ts and Cs of any car finance arrangement to be certain you understand what is or isn’t allowed; speak to the finance company directly if you are still unsure.

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