What happens to a car loan if someone dies?

I was at my local bar and grill the other night with a few regulars I’ve known for years. We somehow managed to get on the subject of car loans. Not the most riveting topic, but we quickly moved on after agreeing none of us know what happens to a loan once you die. So I’m still curious, what happens to a car loan if someone dies?

Answer
That’s undoubtedly an interesting topic to land on, but nevertheless, it’s a great question!
If someone with a car loan dies, the loan is not forgiven. To satisfy the lender, either a relative will need to keep the car and take over the loan, or they’ll have to pay it off. If you want to find out more about what can happen with your loan specifically, you should read through the death clause in your loan agreement.
To prepare for the unfortunate situation, you can outline your wishes in your will or estate plan. However, if you have no preference, you can leave the decision to the executor of your will and estate.
Typically, the debt is settled by:
  • Using the funds from your estate to pay off the loan before selling or giving the car as an inheritance.
  • Having a family member keep the vehicle and take over the loan.
  • Letting the lender repossess the vehicle.
Hopefully, this answers your question, and you can share your newfound knowledge with the regulars at your local bar and grill! Another bit of knowledge you can share is that the average Jerry user saves $879 a year on car insurance by collecting personalized quotes from top insurance providers in seconds.
Jack Walsh
Answered on Dec 08, 2021
Jack is an insurance specialist and writer living in Buffalo, New York. He has a BA from Union College and worked as an insurance agent with Jerry before joining our content team. He enjoys using data and research to break down complex subjects and convey a story. In his spare time, Jack enjoys cycling, cooking, and exploring Buffalo’s beautiful waterfront.
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