Can I Take Over A Car Loan From Someone Else?

Buying a vehicle nowadays is a substantial investment, especially if you take a loan. And with average monthly installments achieving a $563 mark, it’s no wonder you might like someone else to take care of it. 

However, just because we want something, doesn’t necessarily mean we’ll get it quickly. The same goes for loans and getting them transferred. On top of complicating things for the lender, the transfer procedure requires you to find a suitable candidate and then put them through loads of paperwork. 

But there are ways to make it work. It just requires some extra effort on your part and the most valuable resource out there - time. 

Can A Car Loan Be Transferred?

As mentioned, the most challenging part about the transfer is finding the right borrower. Because you were the initiator, the lender has to go through hoops to prepare all the necessary paperwork and hash things out. That is not to mention that they also must approve your choice. 

The next borrower must comply with specific criteria: have a solid credit score, take on the new loan contract, and, of course, sign appropriate documentation. But, above all else, they must be able to afford car loan payments.

You will most commonly pass on the loan when you cannot pay monthly installments. Be it a medical emergency or getting fired, the best solution in such cases is to find the right person to solve the problem.

How Do I Transfer The Loan?

It is possible to transfer the loan; however, just as with many other things, it will take some time to accomplish. Generally, the process follows these steps:

• Inform the lender. As the deal is made between two parties, you and the lender, you’re obliged to inform them about your decision. You must communicate and explain your situation while making a good case for the transfer. After this is out of the way, the lender may decide to make the deal. However, you must first prove that you can’t make monthly payments and that the new borrower can take care of the loan. Then the lender will vet the candidates and use the abovementioned criteria.
• Read through the contract. Reviewing your contract always helps to pick up on small details and remind you about important ones. For instance, you can see how much debt remains on the car loan, who it needs to be paid to, and what fees apply if there’s a transfer.
• Have the borrower read the contract. This is important to the borrower, as they need to be aware of all responsibilities. The terms, of course, will be adjusted to their situation, but it always helps to read the original as a reference point before accepting.
• File new loan paperwork. Most of the time, a new borrower receives practically the same terms as the previous one. The paperwork also gets edited to accommodate that, but the rule always has exceptions. Sometimes, lenders can make the new borrower co-sign the old contract. While it’s not bad for them, it hurts the previous party, as it’s still liable if there are missing payments. So, the best course of action here is to discuss things beforehand and ensure the contract reflects the transfer appropriately. 
• Make a new title. Last but not least, you must also change the car title if the loan gets approved. You will have to drive to your local DMV with the new borrower and bring valid proof of identity (driver’s license), a bill of sale, and even proof of active insurance.

Other Options

If you find that transferring the loan doesn’t help your case or think that the process is too long or complex, you can try doing the following:

• Sell the car. This is the easiest option, as you technically have full ownership after accepting the loan and purchasing the vehicle. It may provide much-needed cash infusion while quickly getting you out of the financial hurdle.

• Have a family member or friend temporarily take over. It comes in handy when having short-term financial problems, especially if it won’t be possible to pay monthly installments for some time. Just as with transferring, you will have to contact the lender and sign a contract stipulation, clarifying just for how long the new person is taking over.

• Refinance the loan. The last possible option is to refinance the loan. In essence, you will be changing loan terms to accommodate your financial situation. It allows for a reduction in monthly payments and extended duration but requires a credit score of 700 and more.

Summary

Summing things up, you can take over someone else’s loan. However, the lender always makes the ultimate decision, and it’s essential to make a strong case for that to happen, as no one likes changing the deal terms and re-doing paperwork.

But if you decide against the transfer, try exploring other options available. Perhaps it’s even better for you to sell the vehicle or have a trusted friend take over monthly payments for a couple of months. 

Related Resources

• Research a Vehicle
• Cars for Sale
• Sell My Car
• Car Ratings
• Automotive News
• Shopping Guides
• New Car Previews
• Expert Car Reviews