How can someone take over my car loan?

how can someone take over my car loan

You may ask, “Can someone take over my car loan?” You can transfer a car loan to another person, although you will have to apply for a transfer, refinance, or sell the car. 

More than 100 million Americans currently have a car loan.1 If you are trying to free yourself of a car loan, keep reading to learn how you can have someone else take over car payments. 

Selling Your Car With an Auto Loan

You may wonder if you should sell your car before the auto loan has been paid off. There are several reasons why you might want to transfer your car loan. When buying your car, you might have been a little too ambitious for the size of your wallet. If you bought a fancy car you couldn’t realistically afford, your car payments might be too high for your monthly budget. 

Perhaps you are simply ready for a new car or need to upgrade because the size of your family is growing. In this case, you may not want to or be able to wait until the car loan is paid off to get your new vehicle which means you need to contact the lender about deferring a car payment or find a buyer who can take over car payments.

Is It Possible For Someone To Take Over Your Monthly Car Payment?

Having car loans taken over by a new borrower is not always possible; even when it is, the process can be quite complicated. Before starting the process, you will want to be positive that transferring the loan is the best and only option. 

If you can manage to pay off the loan before selling it, you could save a lot of time and effort. You would receive the money back through the sale of the vehicle. However, many people don’t have that kind of cash sitting around, so having someone else take over car payments might be the only option.

How To Sign Over a Car Loan

Once you have determined that you want to transfer your car loan and monthly payments, these are the basic steps that you will need to follow to have the new owner take over the loan:

Review Your Loan Agreement

Before getting in contact with your lender, you will want to review the car loan agreement carefully. Read the loan’s contract thoroughly, including the fine print, to see what options it has for handling your existing loan. Reviewing the contract will also equip you to speak knowledgeably with the lender, which might make them more amenable to your requests and suggestions. 

Contact the Lender

Next, you will need to contact the lender to see if they are willing to work with you to transfer over the remainder of the loan term. Depending on their policies, the lender will explain if a transfer of the original loan is possible and what is necessary to complete one. 

If it turns out that it is against your contract to transfer the original loan, then you can ask your lender about the possibilities of refinancing a car in the potential buyer’s name.

Go Over the Original Contract With the Potential Buyer

The person who will take over car payments will need to undergo a credit check and meet the lender’s requirements. They will likely want to review the contract with the original lender before applying and negotiating the takeover terms.

Negotiate New Loan Paperwork

You, the person assuming the loan, and the lender will work together to come up with terms for the new loan that works for everyone. Once the car loan payments, loan amount, and interest rates have been agreed upon, you will return the transfer paperwork to the lender for loan approval. 

Apply For Auto Loan Transfer 

The lender will likely perform their own check on the new owner’s credit report to ensure they don’t have a bad credit score and aren’t in a precarious financial situation. While there are personal loan options for poor credit scores like online no credit check loans and bad credit loans, an auto loan transfer will typically require a good credit score.

Once the new loan is approved, the person who purchased your car will become the primary borrower on the car loan and assume all the remaining car loan payments. Whatever positive equity you’ve already built up in the car before the sale, you will likely receive direct compensation for the transfer. This way, you are free to move on to purchase your next vehicle and cover your new car loan payments. 

Benefits of Buying a Used Car

When purchasing a car, buyers have the choice to get a brand new vehicle or a used one. Many people think that a new car with zero miles is always the way to go. However, there are a significant amount of benefits that come with buying a used car instead of a new one.

Most of the Depreciation Has Already Occurred

Cars depreciate incredibly fast within the first few years, which is why it can be so easy for someone to end up with an upside down loan. You are less likely to owe more on auto loans than the car is worth when you buy a used vehicle because it has already done most of its depreciation by the time you purchase it.

Saves You Money

Buying used can save you a significant amount of money. On average, used cars are nearly half the price of new cars. You may be able to pay a larger portion of the car’s price in cash so that you can take out a smaller loan amount and have more affordable car payments. Shorter terms and lower car payments can help you save money on interest and pay off the loan faster. 

Lower Car Insurance Premiums

Your insurance company is likely to offer you lower insurance premiums on a used car. Additionally, you probably won’t need to purchase gap insurance. You will be able to pocket more money for yourself each month without the high insurance costs for new vehicles.

Avoid Extra Dealership Fees

You might be offered a great deal on a new vehicle that seems perfect. But, oftentimes, new vehicle dealerships can charge costly loan fees. Used vehicles are less likely to have random fees attached to them at every turn. 

Questions To Ask When Buying a Used Car

When buying a used car, it’s important to ask the right questions. 

CategoryQuestions to Ask
Vehicle History– Can you provide a detailed vehicle history report?
– Has the car been in any accidents?
– Are there any outstanding liens on the car?
– How many previous owners has the car had?
Condition– Can I have the car inspected by my mechanic?
– Are there any mechanical problems or any soon-to-be-needed repairs?
– Can I see the maintenance records?
– Are there any recent parts that you have replaced?
Usage– What was the primary use of the car? 
– Where was the car usually parked/garaged?
– Has the car even been used for heavy-duty activities, like towing?
Test Drive– Can I take the car for a test drive?
– Can I test the car on both the highway and residential streets? 
– During the test drive, can I try all the features, including air conditioning, radio, and navigation system?
Price and Negotiation– Is the price negotiable? 
– Are there any additional fees I should be aware of? 
– What payment methods do you accept?
– Can you provide a breakdown of the final cost?
Legal and Paperwork– Is the car’s title clear and ready for transfer?
– Can you provide a bill of sale?
– What warranties are still active or available?
– Will you handle the registration and licensing process?

Frequently Asked Questions About Transferring a Car Loan

What happens to my credit score when I transfer my car loan to another person?

Just a heads-up, transferring your auto loan doesn’t remove the loan from your credit report immediately. It’s only after the new owner makes consistent car payments over time that the loan may reflect positively on your FICO score. Always keep an eye on your credit report to ensure everything is updated correctly!

Can I transfer my car loan if I’m behind on my auto loan payments?

Lenders are usually hesitant to approve loan transfers if you’re behind on your car payments. They prefer a smooth-running loan contract, you know. It’s best to catch up on those car payments before starting the transfer process to increase your chances of approval.

What if the person taking over my car payments wants to renegotiate the loan terms?

While loan assumption typically involves taking over the current loan contract as is, some lenders might allow changes to the terms. However, this is more like getting a new auto loan rather than a simple transfer. Both parties should be ready for some thorough credit checks and paperwork.

Does the car’s insurance policy need to be updated during an auto loan transfer?

When the loan is transferred, the new owner should update the car’s insurance policy in their name. It’s crucial because the insurance is tied to the owner and their unique driver profile, not just the car itself.

Are there any fees associated with auto transfers?

Yes, sometimes lenders might charge a transfer fee when you hand over your auto loan to another person. Always best to check the fine print of your loan contract or chat with your lender to get the full picture.

What happens if the new borrower misses a car payment after the loan transfer?

Here’s the deal: once the auto loan is officially transferred, you’re off the hook! The responsibility for the car payments shifts to the new owner. However, if there were any hiccups during the transfer process and the loan is still under your name, any missed loan payments might affect your credit score. Always confirm the transfer is 100% complete when someone else is going to take over car payments.

Can I transfer just a portion of my car loan balance, or does it have to be the entire amount?

Auto loan transfers usually involve the entire loan balance. It’s an all-or-nothing kind of deal. If the new borrower is only interested in taking on part of the debt, they might need to explore other financing options to cover the amount they’re willing to assume.

A Final Summary From CreditNinja

Having someone take over car payments is possible, but you will have to decide how you want to complete the process. You can sell the vehicle, refinance, or apply for a transfer. Once someone else takes over the car loan, you will be able to enjoy your financial freedom! 

At CreditNinja, we understand that loans can either be an advantage or a detriment. That’s why we offer financial tips through our online blog! Read articles on how to improve your personal finance and learn whose credit score is used on a joint auto loan


  1. Why Americans are struggling with car loans │ CNBC
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