Can Someone Take Over My Car Loan?
Your auto loan payments can often be one of your largest expenditures every month. Unfortunately, there are many reasons why it may no longer be possible for you to make these payments. For example, you may have a medical emergency, change jobs, or face an unexpected expense. Whatever your reason is for wanting to be freed from your monthly loan obligation, a loan transfer could be an option to consider.
Can I Transfer My Auto Loan to Another Person?
There’s no easy answer to this question because the decision on whether you can transfer your auto loan rests with your lender. So if you’re thinking about a loan transfer, the first thing you should do is contact your bank or financial institution and ask if loan transfers are allowed. You can also consult the text of your loan agreement, which may contain rules on loan transfers.
A loan transfer will have more chance of succeeding if the person taking it over has a good credit score. That’s because loan transfers usually have to get the lender’s approval. As part of the approval process, the lender will conduct a credit check and assess the person’s ability to pay the same way they would when issuing a new car loan.
You should also keep in mind that some lenders may be reluctant to offer loan transfers. To deal with this challenge, you should prepare a convincing explanation of why you feel the loan transfer is necessary so you can try to get the lender on your side.
How Does a Loan Transfer Work?
If you contact your lender and they give you the go-ahead for a loan transfer, you’ll need to take several steps to complete it. The first step is to show your existing loan agreement to the person who will take on the loan so they can read its terms and learn what the monthly payment is.
The next stage involves contacting your lender with the details of the person you’re transferring it to. Information such as their employment status, address, and income will prove helpful in strengthening your application for a transfer. After your lender has all the information it requires, it will make a final decision on the loan transfer.
Provided the transfer is approved, you’ll need to sign paperwork to finalize it. The person taking on the loan will also need to sign the new agreement. Typically, the new loan will have the same terms and conditions as your original one.
To complete the transfer process, you’ll need to go to your local Department of Motor Vehicles to transfer your vehicle’s title to the person who has taken over your loan. Remember to ensure that the same process is followed for your auto insurance too.
Are There Alternatives to a Loan Transfer?
As you can see, loan transfers can be cumbersome. Luckily, there are several alternatives worth considering if you want to get rid of your monthly auto payments.
The first is to sell your car. This may be the most straightforward option if you can no longer afford the payments. Selling your vehicle comes with the added benefit of getting some extra cash in your pocket once the deal is complete. Just keep in mind that you’ll probably need to cover any outstanding balance on your auto loan with the money you make from your sale.
If your financial difficulties are only short-term, you may want to speak to a friend or family member about helping you with your auto loan payments for a month or two. This option has the advantage of requiring no paperwork or formal application to your lender. The disadvantage to this option is that borrowing money from friends or family members can create its own problems if you’re not in a position to pay it back as expected.
You should be wary of entering any informal agreement to allow someone else to drive your car in exchange for help to cover your loan payments. One reason for this is that you’ll be responsible for covering any costs arising from parking tickets or other fines they incur while in your vehicle. In addition, if they’re in an accident, your auto insurance could be on the hook for any expenses resulting from it.
What About Co-Signing a Loan?
Co-signing an auto loan involves adding a second person to the contract. This option is often used by people who have a low credit score and struggle to get a loan. The idea is that if someone with a better credit score co-signs the loan, the lender will offer improved terms thanks to the added security provided by the co-signer.
Co-signing could also be an option if you’re struggling to meet your payments. If you can find someone willing to assist you with costs, you can get their name added to the contract. However, co-signing does come with some disadvantages. For one thing, you’ll still be responsible for meeting your car payments if your co-signer can’t afford to do so. This is not the case if you transfer your loan to someone else. Once a loan transfer is complete, you’re no longer responsible for covering its costs.
If you decide to look for a co-signer, be sure to have a clear conversation with them about the benefits and drawbacks of the process. For instance, you should explain that a co-signer’s credit score can be negatively affected if they fail to meet monthly payments on the car loan.
Get Great Auto Loan Terms at North Coast Auto Mall in Akron
Now that you know a little more about auto loan transfers and your other options, why not reach out to our helpful finance team here at North Coast Auto Mall? At our Akron dealership, we’ve built up years of experience helping Ohio customers secure the auto financing they need to get behind the wheel of their dream vehicle. We pride ourselves on working with everyone, even if you have a bad credit score. We want you to have success paying off your car loan in full and will do our best to help make this a reality.
If you have any questions about our auto financing services, don’t hesitate to contact us today. Alternatively, why not stop by our dealership and chat with one of our helpful staff members in person?