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Transferring a car loan sounds like a complicated process. It all comes down to reviewing your contract, having the new loan holder apply for the loan, modifying the car title, and removing the car from your insurance policy.
Car loans are admittedly tricky to negotiate. And sometimes, they can be even trickier to pay.
Whether it be financial hardship, a desire to refinance, or you just want to sell your vehicle, there are several reasons you might want to transfer a car loan. Sometimes you might want to transfer a car loan to another person, while other times a dealership might be taking the finances off your hands.
No matter who the receiving party is, a car loan transfer requires only four steps—but a whole lot of paperwork. With a little help from car insurance comparison and broker app Jerry, here’s everything you need to know about how to transfer a car loan.
Can I transfer my car loan to someone else?
Yes! It’s actually relatively common to transfer a car loan, but it’s not necessarily for everyone. Before you do so, it’s important to evaluate your financial profile.
For a successful car loan transfer, you should:
- Be in good financial standing
- Have solid credit
- Have no outstanding bankruptcies
You should also ensure that the other party is equally stable—ideally more so. They have to be ready and willing to take on any financial burdens or high interest rates you might have (although they can look into renegotiating the loan!).
It’s also crucial that you’re aware of all the potential risks and pitfalls of transferring a car loan. Be sure to read all of the paperwork thoroughly and seek legal counsel if you can’t agree on terms.
How to transfer a car loan
Although it may sound tricky, transferring a car loan can be broken down into four relatively straightforward steps.
1. Examine your contract
First, you must ensure that you’re allowed to transfer your loan. Some contracts tack on extra fees or can even change the terms of the loan if it’s sent from one party to another.
You should be aware of all the caveats before you sign—but give yourself a quick refresher before you go into the loan transferring process.
2. The new loan holder applies for a loan
Then, the new loan holder has to apply for the loan. That means filling out a new application and going through the approval process. Essentially, the other person will be drawing up an equivalent contract—with tweaks for any adjustments you might have agreed on.
In general, it’s easier for the new loan holder to file a loan with the same leasing company as you can expect the deal to go through quicker.
Pro Tip In some cases, leasing companies might ask the other party to cosign on your loan before removing you from the agreement.
3. Modify the car title
Modifying the car title is the final step in relinquishing car ownership. It simply means you’re declaring that you no longer own the car. This step requires a coordinated DMV visit.
For the speediest change in title, both parties should head to the DMV with all license, registration, and personal information. Once all of your documentation has been approved, the title change should be smooth.
4. Sort out car insurance
It’s illegal to drive without insurance in almost every state. After relinquishing car ownership, you’ll need to adjust your insurance package accordingly. If you’re getting rid of a particularly dangerous car, such a switch could save you quite a bit on insurance prices!
To find the best rate for you, get Jerry. Jerry is the super app that helps you save time and money on your car expenses, including insurance.
Jerry will compile quotes from dozens of top insurance like Progressive and Allstate—and once you find the right policy for you, Jerry will handle the paperwork and even help you cancel your old one.
Why would I transfer my car loan?
There are many reasons why you might deem it necessary to transfer a car loan—it’s not just about failing to meet steep monthly payments. Here are some common reasons you might begin a car loan transfer.
You’re experiencing financial stress
Sometimes, it’s no longer possible for you to meet a monthly payment while also maintaining financial comfort. You should look into refinancing your car loan before you outright transfer it, but as a last resort, a transfer could free up some funds.
You’re looking at refinancing
Maybe you’ve found a better deal on financing your car and will have to relinquish your current loan in order to take up a new one. Be warned that you’ll need a very good credit score to jump from one loan to another.
You’re selling your vehicle
It’s rare, but you can actually sell your vehicle and make a profit without paying the full loan value. Essentially, if someone agrees to take your recently purchased vehicle off your hands by paying for the remaining loan value, you could theoretically make a few bucks.
Be aware that most sales don’t work this way—and you’ll have to find a pretty generous buyer!
You’re trading your vehicle in for a more suitable/affordable one
It’s not often that you decide to trade in a vehicle you’ve recently bought. However, if you find the right deal, you can always transfer the remaining loan to the dealership. This requires a reliable credit score from the other party as there will likely be a large chunk of cash to pay off.
Maintaining the right insurance
As long as you own a vehicle, it’s vital to have the right car insurance. If you want great coverage for an even better price, Jerry can help.
After providing you with a comprehensive cross-analysis of the best policies across providers, Jerry will handle the phone calls, paperwork, and even help cancel your old policy! So why do all that extra work when Jerry can do it better?
“Jerry saved me time and money! No joke! No phone calls and everything was done through text and I signed my documents via email. They cut my monthly payments in half.” —Marcos L.