December 17, 2024One Minute Reads: Can a Car Loan Be Transferred to Another Person?

When you’re looking to transfer a car loan to someone else, it’s natural to wonder if it’s even possible. The quick answer is: sometimes, but it depends on the lender. 

Many lenders do not allow direct loan transfers, as the original borrower’s credit score and financial history were assessed when the loan was granted. However, there are a few options that can work similarly: 

• Refinancing: The person interested in taking over the loan can apply for a new loan in their name to pay off your remaining balance. They’ll need to meet the lender’s requirements, and if approved, they’ll be responsible for the loan going forward. 
• Assumption of the Loan: In rare cases, some lenders allow a loan assumption, where the new borrower agrees to take over the existing loan terms. This still requires the lender’s approval and a review of the new borrower’s creditworthiness. 
• Private Agreement: While not ideal, some people make private arrangements where the new driver agrees to pay the original loan holder directly. Keep in mind, this does not officially change who is responsible for the loan with the lender. 

If you’re considering any of these options, it’s best to check with your lender to see what they allow. Every lender has different policies, so a quick call can help you understand what’s possible and avoid potential issues down the road. 

We’re here to help! Give us a call at 800-226-6673 to speak with a Member Advocate and find out what your options are. 

 

Each individual’s financial situation is unique and readers are encouraged to contact PEFCU when seeking financial advice on the products and services discussed. This article is for educational purposes only; the authors assume no legal responsibility for the completeness or accuracy of the contents.