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Can Someone Take Over My Car Loan?

Can Someone Take Over My Car Loan?; Is it possible for someone to take over your car loan? In most cases, the answer is no. Let Lantern by SoFi show you why and other options you can consider.
Brian O'Connell
Brian O'ConnellUpdated March 7, 2023
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Editor’s note: Lantern by SoFi seeks to provide content that is objective, independent and accurate. Writers are separate from our business operation and do not receive direct compensation from advertisers or partners. Read more about our Editorial Guidelines and How We Make Money.
Having another person take over your car loan is possible. You may want someone to take over your car loan if you’re struggling to keep up with your monthly payment. The average monthly payment on a new car loan stood at $716 in the fourth quarter of 2022, according to Experian.Having someone take over your car loan may give you some much-needed relief, but the process of getting someone to take over your auto loan can be quite complex. Below we showcase five steps for how someone can take over your car loan.

Can a Car Loan Be Transferred to Another Person?

Transferring a car loan to another person is possible. An auto loan transfer is exactly what it sounds like — a way to shift an auto loan from one borrower to another. It also involves getting the lender’s permission to transfer the loan and then keeping the lender in the loop. In general, auto lenders may not be thrilled with loan transfers and often might make people who want them jump through hoops to get the job done.The actual auto loan transfer process depends on the specific contract language and inherent restrictions. An example of the latter: The new borrower may have to meet a strict credit score requirement, take on a new loan contract, and complete a load of paperwork if the lender greenlights the deal.There’s one common reason that original borrowers may want to transfer their auto loan to another person: They can’t afford the vehicle loan payments. Whether it’s a job loss, a medical emergency, or some other financial problem, not being able to make your auto payments can eventually mean that having someone else take over the car loan looks like the best solution for you.The average auto loan monthly payment is $716 for new cars and $526 for used cars as of Q4 2022. That’s according to Experian’s State of the Automotive Finance Market report released in March 2023.

How Can Someone Take Over a Car Loan?

The five steps below detail how you may transfer a car loan to another borrower:

1. Contact the Original Lender

Know going in that you’ll need the permission of the auto lender to complete the deal. Consequently, step one is to contact the lender, explain the situation, and make a good case for transferring the loan to another driver.The auto lender may decide to go forward with the deal if you can prove economic hardship and if the new borrower has the financial means to take over your car loan payments.That usually means that the lender vets the new borrower just as it would for any auto loan, looking for income, a robust credit score, and a proven history of paying auto loan principal or any other debts.

2. Check Your Auto Loan Contract

Even though you’re cleared to transfer the auto loan and car title to another driver, it’s still crucial to review your auto loan contract. That will tell you who the debt needs to be paid to, whether or not there are any special fees that are triggered when you transfer a vehicle loan, and if there are terms, rules, or restrictions involved in the proper transfer of a vehicle loan.

3. Have Your Borrower Check the Contract

Whoever will be taking over car loan payments needs to check the original loan contract to see what responsibilities, financial and otherwise, may be in play. The original contract won’t necessarily be exactly like the new contract, as the lender may adjust the terms to better fit the new borrower’s credit and income status. But the original contract still serves as a good reference point for the new borrower, and is well worth a look.

4. File the New Loan Paperwork

The new borrower can file the new auto loan application, based on the lender’s requirements. If the loan is with the same bank or auto lender, the new loan will probably be similar to the old loan, likely with the same terms and conditions.Be aware that the auto lender may ask, or even demand, that the new borrower simply cosign the existing auto loan to make things easier for that lender. In that situation, the new borrower cosigns the original loan, takes responsibility for car loan payments, and starts making payments based on the loan’s existing terms and conditions.That scenario might work for you but it does present a risk to the old borrower, whose name is still on the loan. It leaves the old borrower equally responsible for the loan payments in the event that the new borrower can’t make them. Part of the monthly payment may pay down car loan principal and annual percentage rate (APR) finance charges.Lenders calculating APR on a car loan determines your finance charges. Any cosigning situation should be discussed with both the old and new auto loan borrower. The two should establish specific steps to take if the new borrower can’t handle the loan payments. It may be easier in the long run not to accept the cosigning request and just to move on to another lender.

5. Make a Title Change

When the new auto loan is approved, the next step is to transfer the car title from the old owner to the new owner. An auto’s title signifies the true owner of the vehicle and is required by the lending institution before the transaction can be completed.Both the old owner and the new one can usually get a title transfer at their local Department of Motor Vehicles. Both parties will need proof of identity, like a driver’s license. A bill of sale or buyer’s order may also be required before the title can be transferred to the ultimate owner.Proof of active auto insurance may also be needed to complete the transfer. 

Alternatives to Transferring an Auto Loan

If you were contemplating trying to transfer your auto loan to someone else but don’t want to deal with the hurdles, here are some alternatives you may consider:

Sell the Vehicle to Someone Else

This scenario may be the cleanest and quickest way to resolve an unwanted auto situation. Selling a car with a lien can be cumbersome, but such a sale may provide fast cash if the value of your car is greater than the outstanding balance on your car loan.Selling the vehicle may not be right for you if you have an upside down car loan in which your auto loan debt is greater than the value of your car.

Ask Family for Temporary Help

Another alternative to transferring an auto loan is having a family member or friend take over your auto loan payments temporarily. If you’re an auto loan holder and you’re having short-term financial problems (if you’re between jobs, for instance), you can ask a trusted friend or family member to take over the loan for a few months until you’re financially solvent again.The friend or family member could even make extra payments to help you pay off the car loan early. In that event, it’s highly recommended that both parties sign a contract stipulating the length of the contract and how the auto loan will be paid.If the temporary auto loan payer will also be driving the vehicle on a regular basis, you need to be aware that any parking tickets or toll booth violations will be filed in your name. Traffic accidents are a risk, too, so the temporary driver would also need to be covered by insurance.Recommended: 12 Questions to Ask When Buying a Used Car

Refinance the Auto Loan

To relieve some financial pressure, you can refinance the auto loan. Auto refinancing may potentially let you lower your interest rate or extend the loan term to reduce the size of your monthly payments. To do this, you’ll likely need to have good credit. Some lenders may require a FICO® Score of 680 or higher as part of their auto refinancing eligibility requirements.Recommended: Do You Need Proof of Insurance to Refinance a Car?

The Takeaway

It’s possible to transfer an auto loan to someone else. But given the complexity of handling an auto loan transfer, you may want to view the process as a last resort. There may be easier options, like selling the car or refinancing the auto loan.If you’re looking to refinance your car loan, Lantern by SoFi can help. By filling out one simple form, you can compare offers from multiple lenders and choose one that’s best for you.Find and compare auto loan refinance options with Lantern.

Frequently Asked Questions

Is taking over a car loan an easy process?
How do you define the term “car loan takeover?”
Is there a good alternative to transferring an auto loan to another person?
Third-Party Brand Mentions: No brands or products mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.
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About the Author

Brian O'Connell

Brian O'Connell

Brian O’Connell is a freelance writer based in Bucks County, Penn. A former Wall Street trader, he is the author of the books CNBC's Creating Wealth and The Career Survival Guide. His work has appeared in multiple media platforms, including TheStreet.com, Bloomberg, CBS News, Yahoo Finance, and U.S. News & World Report.
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