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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'Connell

Updated July 7, 2021
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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.
Given that the cost of owning a car across the U.S. is not cheap—the average new vehicle monthly payment is $563—it's no wonder that some of us might want someone to take over our auto loans.But just because car owners may want someone to take over their car payments, that doesn't mean it’s easy to make that happen. In fact, transferring an auto loan can be a complex process for the original borrower, the new borrower, and the auto loan lender.Even so, there is a method to transitioning an auto loan from one borrower to another. It’s all a matter of creating a blueprint, sticking to the plan, and handling all the details that can come up in an auto loan transfer. 

Can a Car Loan Be Transferred to Another Person?

An auto loan transfer is exactly what it sounds like.It’s 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 will 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. 

How Can Someone Take Over a Car Loan?

There is a process to transfer a vehicle 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, but may first require you to prove that you can’t make the payments and that the new borrower does have the financial means to take them over. 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 making on-time auto loan payments.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 how much debt remains on the auto loan, 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 will 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. 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 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 will 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 you don’t want to deal with the hurdles, you do have some decent alternative options.
  • Sell the vehicle to someone else. This scenario may be the cleanest and quickest way to resolve an unwanted auto situation. Selling the vehicle not only avoids the need to transfer an auto loan, it can also provide a cash infusion if you're experiencing financial struggles.
  • Have a family member or friend take over the 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. 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. 
  • Refinance the auto loan. To relieve some financial pressure, you can refinance the auto loan. This 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 (a FICO® score of 700 or more will aid the cause) to get the best auto loan refinancing loan terms. 

The Takeaway

It can be 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 do find you’re looking for an auto refi, Lantern Credit can help. By filling out one simple form, you can get access to offers from multiple lenders in our network so you can choose the one that’s best for you.
The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.SOLC0521088

Frequently Asked Questions

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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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