Asset registration and recording ownership

The vast majority of motor finance agreements are secured against the vehicle being financed. 

For example, under hire purchase or personal contract purchase agreements.

Rather than being given a lump-sum loan, the customer is given the use of a vehicle, which must be paid for. The vehicle is the property of the lender and it acts as its “security” in the event of the customer experiencing any problems and not being able to meet his/her contractual repayments. A finance company will generally remain the legal owner of the vehicle until all finance repayments have been made.

Any vehicle (security) which is purchased on a secured finance agreement must be capable of being identified and correctly valued using the latest market intelligence. 

In the motor industry, all cars have a unique Vehicle Registration Number (number plate) and a Vehicle Identification Number (VIN), which allow firms to determine the detailed specification of the vehicle. Finance companies will usually rely on motor dealers to accurately record the details of the vehicle on their showroom systems.

Finance companies will then register their financial interests in those vehicles with the asset registration agencies, such as CDL, Experian and HPI, so that there is a clear and public record of ownership. This record helps finance companies to protect their valuable assets from any unauthorised sale. A lender's list of financial interests in vehicles is sent to agencies on a daily basis, so that when a dealer or customer carries out a vehicle history check the record confirms outstanding finance. This usually protects the customer from being sold a vehicle which is not the sellers to sell.