You can’t just transfer your car loan to someone else if you haven’t paid it back. However, in some cases it may be possible for someone else to borrow for this purpose. Applying for a car loan means that the new borrower is eligible by the lender to take over the loan, although this is not widely available. Can someone take over your car loan?
Suppose you took a loan and then came across a sum of money that allows you to cover the amount you borrowed and now you don’t need the loan anymore. Or maybe you found someone who offered you a loan on better terms. What are your options?
It is possible to transfer a car loan from one person to another, and there are two different ways to do it.
Ways to change the borrower
The first way is to change the existing borrower, which means you will notify the lender that the new person will pay off the remainder of the loan, although the person buying the car will have to undergo a financial condition assessment. Taking over an existing loan is easiest if the loan is as good as the existing debtor’s. The person named on the loan will need to contact the lender and ask for modification. You will then submit an application for approval to take over the loan. Conditions may change with modification. It is also the best option if the current debtor is afraid of a decrease in creditworthiness. In the case of such a solution, less additional costs are also generated for the original borrower.
The second way to transfer a car loan is to look for a new lender. The new lender will pay off the remainder of the debt by granting the new loan to the new borrower. If your loan is worse than your existing one, you may need to look for a separate loan. The current lender may disagree and you may even need a high-risk loan. Then you can use this loan to pay off your existing one. This option will hurt the current debtor more.
While some loans are negotiable, the most important thing to look out for is to make sure you don’t get a loan that is not available from your funds. When taking out a loan, you should realistically consider whether you will be able to pay it back in full. This way you can avoid the potential of getting stuck in a non-transferable loan that can expose you to debt and ultimately worsen your credit condition.