With all the budgeting and financial acumen in the world, sometimes life throws us a curveball that puts life into disarray. You could be the best prepared person in the world but life happens and it likes to try us.
What happens when you can no longer afford your auto loan? Can you transfer that loan to someone else?
You can if your lender agrees it.
Transferring an auto loan
Transferring an auto loan is not your only option but it is an option if the lender supports it. Not all lenders will allow you to transfer the loan but many will. It’s best to check your loan paperwork or call the lender direct to find out. They may have other, better options for you to consider.
If you want to transfer the loan and your lender will allow it, you can. It doesn’t take long and shouldn’t cost much.
The new borrower will have to complete loan approval the same as you did to be eligible. They will also have to qualify for the amount and term of your existing loan, pass a credit check and then you’re good to go.
The new borrower will then sign the loan contract taking over the loan. Once done, you are no longer liable for the loan, the new borrower is.
Other options for managing an auto loan
Not all lenders will accept a transfer. If your lender is one of those, you still have options if you’re having trouble making payments.
Refinance the auto loan – Refinancing means getting a new cheaper loan to pay off your existing one. This works best if your original loan is expensive, a bad credit car loan or over a shorter term with higher payments.
Sell the car – If you have paid enough of the loan off to have equity, you could always sell the car and pay off the loan. This would leave you without a car but would also leave you without a car payment.
Trade the car in for a cheaper model – If you drive a premium car, you could trade it in for a much cheaper model. This is useful if you have enough equity in the car to be able to pay the loan and leave enough for a cash payment for a replacement or a much smaller loan.
Discuss the situation with the lender – Most lenders will work with borrowers who deal with them in good faith. If you discuss your situation with your lender before you get into real trouble or miss a payment, they may have another solution that could work better.
It’s always worth discussing it with the lender as they can be surprisingly helpful.
If you need assistance finding a cheap auto loan, we can help. Contact our team to see how much we could save you!