How to Transfer a Car Loan to Another Person

While most vehicle loans aren’t transferable, vehicle loans may include an option for transferring the account to another person. You can read your loan paperwork or talk to your lender to find out if this is the case for your loan.

The average borrower with a loan for a new vehicle owes an average car payment of approximately $729 per month. That’s a significant monthly expense, so there are plenty of reasons someone might want to transfer their car loan. 

Perhaps you can’t make your car payments, and a friend wants to take it over. Or maybe you’re getting divorced, and your soon-to-be ex is willing to take on the financial responsibility for the vehicle. 

Before exploring how to transfer a car loan to another person, you must first understand whether it’s possible.

Can You Transfer a Car Loan to Someone Else?

Most auto loans aren’t transferable, so there isn’t a straightforward way to transfer the loan to someone else. 

Theoretically, you could pass the buck to someone else by letting them drive your car and ensuring they make the monthly loan payments. You could even ask the other person to pay you directly, allowing you to make the car loan payments on their behalf. 

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This might sound like a tidy arrangement, but it can lead to a lot of issues. You still technically own the car, which means insurance and credit responsibilities are still on your shoulders. And if your friend decides they don’t want to pay the loan anymore or they wreck the car, you can be stuck picking up all the pieces.

In very rare cases, vehicle loans may include an option to transfer the account to another person. Read your loan paperwork or talk to your lender to find out if this is the case for your loan. If your loan allows it, the lender can also provide instructions on how to transfer a car loan to a spouse or other individual, which might include:

  • Approval of the new borrower. The lender will likely need to run a credit check on the new borrower to ensure they can afford the payments.
  • The new borrower signing paperwork. They must agree to the loan terms.
  • Updating titles and other paperwork. You may need to update the car information with the DMV. The new borrower will also need to provide proof of insurance on the vehicle before you drop your policy.

Transferring Your Car Loan (If Your Lender Allows)

Transferring a car loan isn’t as simple as swapping names on paper—it involves contacting your lender, securing additional loan approvals, and transferring the vehicle title. Here’s how to transfer a car loan to a family member, friend, or other individual.

  • Step 1: Contact your current lender to see if they allow loan transfers, and obtain your exact payoff amount.
  • Step 2: The person who wishes to take over your loan must apply for a new car loan that covers the payoff amount.
  • Step 3: Ask the new lender to pay off the original loan so your original lender can release the lien on the vehicle lien.
  • Step 4: Visit your local DMV to transfer the vehicle’s title to the new owner.
  • Step 5: Once the title is transferred, the new owner must purchase insurance for the vehicle.

Tip: If you’re planning to purchase a new car, make sure you know how much car you can afford so you don’t experience payment issues in the future.

Consider Voluntary Repossession

Most people won’t be able to transfer their car loan to someone else. However, that doesn’t mean you need to keep the car loan or that the vehicle can’t change ownership.

If you know you’re not going to be able to make payments on your car and you don’t think you have a chance of selling it and paying off the loan, reach out to your lender. Explain the situation and tell them that you’d like to surrender the car voluntarily. This allows you to give up the vehicle without accumulating a series of late payments or facing the embarrassment of a repossession agent showing up unexpectedly. 

The lender will try to sell the vehicle to recoup what you owe, and this will show up on your credit report as a negative mark. If the lender can’t sell the vehicle for what you owe, you might also need to pay the difference.  

What if You Want to Keep Your Car?

If you want to keep the car but are struggling to make your payments, you may have some options for relief. One is to reach out to your lender as soon as you know you’re struggling, so you can talk about options. Many lenders have programs to help individuals improve their payment history. Your lender might also allow you to skip a payment and add it on to the end of your loan. 

Another option is to refinance the loan. It could be that your loan terms simply make monthly payments more expensive than necessary. If your credit has improved since you took out the loan—or if you have someone with good credit willing to cosign your car payments—you may qualify for a better interest rate or more favorable terms. Some people save hundreds of dollars a month by refinancing their loans.

The Bottom Line on Transferring a Car Loan to Someone Else

You generally can’t slide your auto loan booklet over to a friend and assume the matter is handled. However, if you can’t afford your monthly car payment, you may have options, such as selling your current vehicle or voluntarily allowing your lender to repossess it.


Whether you plan on getting a different vehicle or allowing voluntary repossession, monitor your credit report to understand its impact on your financial future. Obtain a free credit report card today and make informed decisions with confidence.

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