Should you refinance your car on behalf of someone else?
If you’ve found that your vehicle payments are no longer manageable, you might feel inclined to pull out of the loan altogether and let someone else take over the responsibility. But this is not a simple process and cannot be done by simply refinancing the vehicle with a new owner instead of yourself. Instead, consider other routes you can take to get rid of the vehicle.
Take away key
Technically, you can refinance a car in someone else’s name, but it’s a multi-step process that involves refinancing twice and may not work out. Selling the car is often a better option.
How to 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 the sale of the car. Here are two ways to transfer ownership to someone else.
Sell the vehicle
If you are looking to transfer ownership of a vehicle but have not yet fully paid off your loan, you have what is called a lien on your vehicle. This means that the lender has a legal claim on 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 dealership, but you can still sell it privately. If you choose to sell privately, be prepared to transfer title to the vehicle yourself.
Discount rate overview
Selling the vehicle is the best option if you are looking to transfer a car loan to someone else.
Refinance the vehicle twice
If you’re set on refinancing the vehicle on someone else’s behalf, there are two main steps you’ll need to follow: refinance the vehicle with a co-borrower, then refinance again to exit the loan.
Again, this may not work and is not a recommended approach, but can sometimes be effective. First, apply for the loan with the co-borrower and sign with new equal responsibilities. Then you will refinance the loan once more, but this time remove your name from the loan.
Keep in mind that refinancing has very specific requirements and it’s likely that so little time has passed during the term of the loan that the lender will not approve this step.
Other ways to save on a car loan
Here are more practical options if you’re looking to save money on your current loan or get out of your current car.
Request a change
To modify your car loan, you will need to speak to your current lender. Typically, modification is presented as an option that benefits both the borrower and the lender, as you will still retain use of the vehicle and the lender will not have to pay to repossess the car.
Gather information about your current financial situation and be prepared to explain why your loan should be changed. It’s not enough to say you need an adjustment, you’ll need to show that you can continue to make payments after the changes are made.
Trade in your car
If your problem is based on your current loan payment and refinancing is not an option, trading in your car may be a good idea. If you’re able to find a more affordable car that still meets your needs, and you get pre-approved for the same or lower rate than what you’re currently paying, you’ll be able to opt out of your current loan and walk away with a monthly cost. more affordable.
Simply refinance on your own
Self-refinancing is a good idea if you intend to keep your current vehicle and want to lower your monthly payment. After reviewing your current loan and what you can afford, it’s wise to apply for loan prequalification and shop around for different options. Banks, credit unions, and online lenders are all options 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 your loan to someone else, they must follow the typical purchase and financing process. The other option is to refinance the car loan or have it modified if you want to hang on to the car yourself.