If you find that your vehicle payments are no longer manageable, you may be tempted to cut yourself off the loan completely and let someone else take the responsibility instead. But this is not an easy process and cannot be done by just refinancing the vehicle with a new owner rather than yourself. Instead, consider other routes you can take to get off the vehicle.
Technically, you can refinance a car in someone else’s name, but it’s a multi-step process that requires you to refinance twice and may not work. Selling the car is often a better option.
Transfer a car loan to someone else
In order to transfer a car loan to someone else, you must also transfer the vehicle itself, which is legally considered a sale of the car. Here are two ways to transfer ownership to someone else.
Sell the vehicle
If you want to transfer ownership of the vehicle, but have not yet paid off your loan in full, you have a so-called lien on your vehicle. This means that the lender has legal claim over the vehicle until it is paid off or transferred to someone else.
The easiest way to sell the vehicle in this scenario is through a dealer, but you can still sell it privately. If you choose to sell privately, prepare to transfer title to the vehicle yourself.
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Selling the car is the best option if you want to transfer a car loan to someone else.
Refinance the vehicle twice
If you are determined to refinance the vehicle in someone else’s name, you must follow two primary steps: refinance the vehicle with a partner and then refinance again to take yourself off the loan.
Again, this may not work and is not a recommended approach, but can sometimes prove successful. First, apply for the loan from the sharer and sign off with new equal responsibilities. Then you refinance the loan again, but this time remove your name from the loan.
Keep in mind that refinancing has very specific requirements and if not much time has passed over the life of the loan, the lender will not approve this step.
Other ways to save on a car loan
Here are more practical options if you want to save money on your current loan or get out of your current car.
To change your car loan, you need to talk to your existing lender. Typically, modification is presented as an option that benefits both the borrower and the lender, because you still continue to use the vehicle and don’t have to pay the lender to repossess the car.
Gather information about your current financial circumstances and be ready to argue why your loan needs to be changed. It’s not good enough just to say you have to adjust it, you have to show that you can continue to pay once the changes are made.
Trade in your car
If your problem is based on paying your current loan and refinancing isn’t an option, trading your car in may be a good idea. If you can find a more affordable car that still fits your needs and get pre-approved for a rate that’s the same or lower than what you’re currently paying, you can get rid of your current loan and drive with a more affordable monthly fee .
Just refinance yourself
Refinancing yourself is wise if you want to keep your current car and reduce your monthly payment. After considering your current loan and what you can afford, it is wise to apply for loan prequalification and shop around for different options. Banks, credit unions, and online lenders are all options for when you’re ready to start shopping.
It’s not easy to refinance your vehicle in someone else’s name – and in most cases it’s not even possible. If you are interested in giving your vehicle and loan to someone else, they must go through the typical purchase and financing process. The other option is to refinance or adjust the car loan if you want to stick with the car yourself.