If you're buying a car for somebody else or have decided to sell a vehicle which is not yet fully paid off to a friend, you could be wondering if it's possible to transfer an auto loan. Many people are unclear as to the full auto loan terms when they get a new or used car loan, and are unaware of restrictions concerning things like transferring their loan to someone else. Your auto loan lender can fill you in on many of the restrictions which are in place once car loan prepayment is made, or, if you are only wondering about transferring your auto loan, you can simply read this guide.
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The short answer is no, it's not technically possible to change a single auto loan from one person to another. However, there is a simple way to swap a loan so that whoever you sell your vehicle to is responsible for making payments. Have that person take out a loan for the purchase price of the vehicle and pay you directly with it. You can use the money to finish paying off the loan you took out on the vehicle in one lump sum, and the person who bought the car is now responsible for paying back their lender. This is the simplest and smartest way to transfer a loan between two people.
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You might think you can simply have whoever the new buyer is take over monthly loan payments by paying you as you receive the invoices or by sending checks to your lender on your behalf. This is a bad idea because it means that the new buyer is not directly responsible for payments, and if the new buyer fails to produce money on time, it's your credit that takes the hit. Even if you're selling a car to a friend whom you trust, it's easier and smarter all around to have the friend refinance the loan, pay you for the full amount and be directly responsible for payments to the new lender.
Since the person who is buying your vehicle should get a new loan in order to do so, that person will have to meet standard auto loan requirements. Of course it will be cheaper and easier to find a loan if the new buyer has a good credit rating, but they will also need proof of employment and residence. They also need to be able to take over the insurance policy. Insurance providers may be able to transfer insurance payments to the new owner of the vehicle or have some other procedure in place to help, so ask the current provider about their transfer policies.
Although it's not technically possible to transfer the same loan between two people, it's still a fairly simple process to transfer ownership of a vehicle and responsibility for payments by having the new buyer take out a different loan.
