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Can a Car Loan be Transferred to Someone Else?

last updated April 17, 2018 by

Can a Car Loan be Transferred to Someone Else

One of the biggest worries for people with a large car loan is the worry that circumstances may change and they may be left with a loan they cannot afford. It is important to prepare for these situations to make sure that you have options if your circumstances do change. Unfortunately, many people do not prepare for changes in circumstance and find themselves in a tough situation if the worst happens.

An important question to ask is “can a car loan be transferred to someone else?” Because if it can then there are more options open to you if circumstances mean that your car loan suddenly becomes  unaffordable. If you are looking for a car loan and have concerns that your circumstances may change then this information can be very useful to you. If you are in the unfortunate situation where you can no longer afford your loan, this article can help you understand the options available to you.

Is Transferring a Car Loan Possible?

The quick answer to this question is “yes” but the longer answer is much more complicated as it all depends on your particular loan contract.

Some car loans entirely prohibit the option to transfer your loan to another person, meaning that you will be responsible for the loan regardless of any change to your circumstances.

  • Thankfully, this is not always the case and some car loans do allow you to transfer your loan to a “qualified buyer.” It is now time for a lot of hard work trawling through your loan contract to find out whether you have this option available to you.
  • If the clauses and small print make it hard to work out whether this option is available to you then it may be worthwhile to contact your lender who should be able to advise you.
  • Don’t despair if your specific car loan doesn’t allow you to do this as there will still be some other options available to you if your loan is no longer affordable.

What to Do If You Can Transfer The Loan?

If you can transfer the loan then the steps should be very straightforward as long as you have someone to transfer it to.

Bear in mind that anybody who takes over the loan from you will need to meet the lending and insurance requirements of your car loan provider. They will need to pass a credit check which means their credit score will at least need to be as good as yours when you first took the car loan out.

  • When you choose to transfer your car loan you may find that there are some penalty or administration charges due.
  • The new owner may agree to contribute to these costs but you will ultimately be responsible to pay them if they refuse to do so. If the new owner wishes to refinance with another lender then you may also be required to pay early settlement fees on your original loan.
  • It is important to discuss everything with the person taking over your vehicle loan to make sure you are both fully aware of the potential costs involved in transferring the loan.
  • You will need to transfer all of the paperwork related to your vehicle over to the person taking over your car loan.

The other steps in moving over the details to the new owner of your vehicle may vary depending on the laws of your state. You will need to go to your local Department of Motor Vehicles or to a notary to change the details over. Make sure that you have the up to date inspection and emissions testing paperwork with you.

What Can You Do if You Cannot Transfer the Loan?

If you cannot transfer the loan there is still an option available to you to sell the car outright so that you can use the funds to pay off your original loan.

In the best case scenario you will be able to cover all of the costs left on your car loan but it is more likely that you will only be able to cover a large portion of the amount due and will need to contribute the rest yourself.

This is still a much better scenario than being left with payments that you cannot keep up to date on.

Do Not Hide Missed Payments!

If you have already put yourself in a position where you are behind on your payments and are at risk of repossession, do not hide these from a new buyer.

If a new buyer takes over your loan it is only right that they are fully aware of the current situation of any missed payments.

This is not just a moral issue but potentially a legal issue as a the new owner unaware of the situation with missed payments could claim that you have sold the vehicle under false pretenses.


It is always important to prepare for any unexpected events when you are taking on any kind of loan. With a vehicle loan you especially want to be careful so that you do not end up in the position where your vehicle is repossessed due to missed payments. This can cause stress, impact your credit rating and leave you without transport, which could put your job at risk.

Thankfully some car loan contracts allow you to transfer your loan to a new vehicle owner which can help if the worst happens.