credit card protection on car in son's name

[mark88man]

My son is buying his second car out of savings.

I have persuaded him to avoid credit cards for as long as possible so he cant buy using that to get some buyer protection. However can you tell me if I buy a card with my credit card but register the car in his name - am I/are we covered by the usual protections.

It is a bit easier for insurance purposes, and also for correct delivery of any speeding tickets, if it is in his name. But it wouldn't be a deal breaker if it had to be in my name.

Thank you in advance

[Alaric]

I have persuaded him to avoid credit cards for as long as possible

Why though? My first credit card was unsolicited with the launch of Access in 1972. The concept of not having to carry a cheque book or visit a bank to withdraw cash was and remains an appealing one. With a charge of 1.5% per month, you just avoid spending more than you can settle the following month.

A debit card has the same value of avoiding the need for cash or cheques with the exception that a credit card gives you a few days of grace if the funds are not immediately in the bank account.

[gryffron]

AIUI Section 75 protects YOU from losses. Since you would not have any further loss if your son was paying the balance, I can't see the credit card would protect him.

Otoh: As you suggest, DVLA register the keeper (son). There's nothing to stop you being the named purchaser on the receipt, and son the DVLA registered keeper. Just tell the dealer that's what you want. The subsequent transaction between you and son then being no one else's business.

Why though?

Maybe he is too spendthrift. Though if he has managed to save for a car he can't be too bad. I must admit, I'd have thought having a CC with a very low limit, purely for the sake of building a credit record might be a good move, long term.

Debit card does NOT have the same value, as it does not give Section 75 protection.

Gryff

[mark88man]

I have persuaded him to avoid credit cards for as long as possible

Why though? My first credit card was unsolicited with the launch of Access in 1972. The concept of not having to carry a cheque book or visit a bank to withdraw cash was and remains an appealing one. With a charge of 1.5% per month, you just avoid spending more than you can settle the following month.

A debit card has the same value of avoiding the need for cash or cheques with the exception that a credit card gives you a few days of grace if the funds are not immediately in the bank account.

Projecting some of my weaknesses (at that age) onto him!

I don't disagree but just trying hard to hammer home budgeting and delayed gratification

[mark88man]

AIUI Section 75 protects YOU from losses. Since you would not have any further loss if your son was paying the balance, I can't see the credit card would protect him.

Otoh: As you suggest, DVLA register the keeper (son). There's nothing to stop you being the named purchaser on the receipt, and son the DVLA registered keeper. Just tell the dealer that's what you want. The subsequent transaction between you and son then being no one else's business.

..snip..

Gryff

Gryff - sso I am the owner and purchaser and he is the keeper - OK that was the plan but I was uncertain if that would play with the credit card. Bbut the simple way you put reinforced that the ownership and loss can be mine, but the administrative details of being the keeper is his and a separate thing. I am not gifting him the car just permitting him to drive. OK

Thank you. We're not talking about more than £2k for the car so lemon-protection is not unimportant

[JonE]

so I am the owner and purchaser and he is the keeper - OK that was the plan but I was uncertain if that would play with the credit card.

The dealer may need some persuasion to accept even a part-payment on a credit card. Haggle the price before mentioning the credit card as the way you want to pay a deposit (enough to get you s75 cover) but be prepared to pay a bit of a supplement (or walk away if you can't get the deal you want - another worthwhile lesson for son). You can pay for parts & service with a credit card but car sales departments really don't like them (and may not be authorised to accept them). In any event, I strongly suspect that paying the full sum on a credit card would be a complete non-starter.

By the way, if he doesn't already do so then your son will probably find that adding you as a named driver would help with his insurance premium.

I agree that having a credit card would help build a credit record - he could use it for fuel costs and pay off in full every month. The fact is that having no record of credit means he has no record of properly managing credit and that can make things very difficult: if he's never borrowed a penny then he hasn't demonstrated that he'd repay a borrowed penny so must be considered a bit risky.

Cheers!

[gryffron]

so I am the owner and purchaser and he is the keeper...

As far as the dealer is concerned, yes. This must be a pretty common arrangement e.g. People trading as ltd companies, husband & wife... However, this deal won't play with the insurance company, who won't let him insure a car he doesn't own, so...

I am not gifting him the car just permitting him to drive. OK

Neither. You will sell the car to your son the moment after you buy it. He becomes owner and keeper, and can then insure the vehicle before leaving the forecourt (ring and sort it before you go to collect). "Sell" is important, because you would have no financial loss to reclaim from a gift.

As I see it the principle here is:
Son lends you £2k (verbal agreement)
You buy a car from the dealer in your name (receipted). YOUR potential loss at this point covered by Section 75. He is registered as keeper immediately, because you don't want another name recorded on the DVLA documents.
You sell car to son to settle the debt. (verbal agreement)

If everything goes ok, your son ends up the legal owner of the car.
Should the car prove to be a lemon, and/or the dealer go broke during the transaction, you would be forced to refund your son, and thus have a financial loss to reclaim against the CC. The only downside is you have all the paperwork hassle of fighting the claim. But, as you state, this is a protection not otherwise available to your son.

Gryff

[Slarti]

My son is buying his second car out of savings.

I have persuaded him to avoid credit cards for as long as possible so he cant buy using that to get some buyer protection. However can you tell me if I buy a card with my credit card but register the car in his name - am I/are we covered by the usual protections.

It is a bit easier for insurance purposes, and also for correct delivery of any speeding tickets, if it is in his name. But it wouldn't be a deal breaker if it had to be in my name.

Thank you in advance

When I bought my current car I discussed paying for it on credit card and the fee they would have wanted was about 5% on top of the cost of the car. But they were happy for me to pay the deposit on my credit card with not transaction fee as that was within their normal transaction range for servicing, etc.

As long as you pay over £100 on your credit card then section 75 applies, so I paid a deposit of over £100 on credit card and the balance by debit card, which did not incur a transaction fee.

I wish I'd avoided a credit card when Access sent me one unsolicited as I was obviously not mature enough to handle it properly. Took me about 5 years to sort it out, once I realised that I was an idiot.

Slarti

[melonfool]

When I bought my current car I discussed paying for it on credit card and the fee they would have wanted was about 5% on top of the cost of the car. But they were happy for me to pay the deposit on my credit card with not transaction fee as that was within their normal transaction range for servicing, etc.

As long as you pay over £100 on your credit card then section 75 applies, so I paid a deposit of over £100 on credit card and the balance by debit card, which did not incur a transaction fee.

I wish I'd avoided a credit card when Access sent me one unsolicited as I was obviously not mature enough to handle it properly. Took me about 5 years to sort it out, once I realised that I was an idiot.

Slarti

Firstly - when I recently bought a car there was no problem putting some of the money on a cc and no charge to me, though they had a max of £1k (so I put £1k on, giving me a month's grace to pay that part).

You don't need to put £100 on actually, you only need to pay all or part of a purchase that costs £100 or more (up to £30k I think, relevant, perhaps, for car purchases).

How soon does he need the car? Could he apply for a credit card just for this and then make use of it judiciously in future - they do have their plus points (one of which is the one you are hoping to use!).

Mel

[melonfool]

Oh, I think I also got an unsolicited Access card in the 1980's. The first time I used it was to buy a pair of red and white striped shorts in NaffNaff that were £10.



Mel

[PinkDalek]

However, this deal won't play with the insurance company, who won't let him insure a car he doesn't own, so...

This type of situation was discussed recently and I'd be interested in knowing the answer.

I purchased a car for my son's main use. My name is on the V5C as registered keeper. I told the insurers the precise arrangement and I am named as a secondary driver. He is the insured party.

Was I misinformed, please?

[DrBunsenHoneydew]

However, this deal won't play with the insurance company, who won't let him insure a car he doesn't own, so...

This type of situation was discussed recently and I'd be interested in knowing the answer.

I purchased a car for my son's main use. My name is on the V5C as registered keeper. I told the insurers the precise arrangement and I am named as a secondary driver. He is the insured party.

Was I misinformed, please?

Different companies have different rules.

Some insurers will only offer you cover as the main driver if you are also the registered keeper of the car. However many will indeed insure you regardless, so presumably you have cover from such a company.

Also, as the registered keeper is the person named on the registration certificate (DVLA V5C), this does not have to be the person who bought and paid for the car. However, some insurers will only cover you to drive a car you do not own if it belongs to: your spouse, partner or civil partner; a parent; your employer; or a lease company.

You do need to check and be entirely clear with the company!

[gryffron]

However, this deal won't play with the insurance company, who won't let him insure a car he doesn't own, so...

This type of situation was discussed recently and I'd be interested in knowing the answer.
I purchased a car for my son's main use. My name is on the V5C as registered keeper. I told the insurers the precise arrangement and I am named as a secondary driver. He is the insured party.
Was I misinformed, please?

You may be right. I just thought from the earlier discussions that it might be a problem. Irrelevant in this case anyway as that is not the OPs objective

[Loup321]

There is a voluntary scheme for Debit Cards called chargeback, which also applies to credit card purchases under £100. It's similar to the Section 75 protection. The best link I could find was https://www.moneyadviceservice.org.uk/e ... ay-by-card

It might mean that you are both happy for him to go ahead with the purchase on his debit card, with no involvement from you and your credit card, and it keeps the whole transaction simpler.

[gryffron]

There is a voluntary scheme for Debit Cards called chargeback, which also applies to credit card purchases under £100. It's similar to the Section 75 protection. The best link I could find was https://www.moneyadviceservice.org.uk/e ... ay-by-card

It is "similar" but nowhere near as good.

The legal agreement between Credit Card Companies and retailers, allows the former to apply chargeback on any purchases, at the latters expense. And because YOU are the CCC's customer, they are always happy to do this.
BUT
If the retailer goes bust, the CCC would have noone else to charge. And suddenly you'll find they are not willing to give you your money back. Because it is their loss, rather than the retailers loss. Section 75 says the CCC must bear the loss, for creidt cards, not debit or prepaid ones. And also if you need to sue the provider, you can sue the CCC too, because they are jointly liable. It is an important legal distinction, and one which many customers have fallen foul of.

All praise Section 75

Gryff

[PinkDalek]

Slightly off-topic, as per gryffron, but thanks for your detailed reply and for my own comfort (as this issue does seem to come up from time to time):

However, this deal won't play with the insurance company, who won't let him insure a car he doesn't own, so...

This type of situation was discussed recently and I'd be interested in knowing the answer.

I purchased a car for my son's main use. My name is on the V5C as registered keeper. I told the insurers the precise arrangement and I am named as a secondary driver. He is the insured party.

Was I misinformed, please?

Different companies have different rules.

Some insurers will only offer you cover as the main driver if you are also the registered keeper of the car. However many will indeed insure you regardless, so presumably you have cover from such a company.

Also, as the registered keeper is the person named on the registration certificate (DVLA V5C), this does not have to be the person who bought and paid for the car. However, some insurers will only cover you to drive a car you do not own if it belongs to: your spouse, partner or civil partner; a parent; your employer; or a lease company.

You do need to check and be entirely clear with the company!

Yes, all now rechecked. Paperwork reflects registration document in the name of the parent (me) and the parent as the owner. Main driver and the insured party shown as my son.

Thanks again.