Is transferring a loan to a family member right for you? Learn if this is a possibility and how to go about the process.
4 minutes
05.26.2023
There are a number of reasons to consider transferring a car loan to a trusted family member that could be beneficial for you, your family member, or both. Find out if it is a feasible option, how to proceed through the process and alternatives to consider.
You can transfer a car loan to a family member. However, you have to be willing to give up ownership of the car. It is also dependent on whether or not the lender will approve and there are usually stipulations involved, so the process has the potential to stop there.
Once you have decided to transfer your car loan to a family member, it is important to know the steps and process.
Carefully review the existing car loan agreement to understand the terms, conditions and any restrictions related to loan transfer or assumption. Identify whether the lender allows loan transfers and if there are any specific requirements or fees associated with the process.
Reach out to the lender to inquire about their loan transfer policies and procedures. Discuss the possibility of transferring the loan to a family member and ask for guidance on the next steps. Make sure you have prepared what to say with a solid explanation. Ask about fees associated with the process, as well as what the assumption criteria are for the family member. The lender will provide specific instructions and may require additional information or documentation. This documentation may include items such as driver’s licenses and a bill of sale.
While you may want to choose a family member based on the relationship and trust, you also need to consider their eligibility. Determine if the family member meets the lender's criteria for assuming or refinancing the loan. This typically involves evaluating their creditworthiness, income stability, and ability to take on the financial responsibility of the loan. The family member may need to provide documentation such as income verification, credit history and identification.
Next, the family member will need to file a loan assumption application, providing the required documentation for both you, the original borrower, and the family member. You will then need to wait and obtain approval from the lender. The lender will assess the family member's creditworthiness and make a decision based on their criteria.
Inform your car insurance provider about the loan transfer and update the policy accordingly. The family member should be listed as the primary borrower and owner of the vehicle in the insurance documents. They will also need to make sure they are adding the vehicle to their insurance. Depending on state regulations, the title may go to the lender instead of the chosen family member.
Communication is key to any relationship. When going through an important transaction such as transferring a car loan, it is important to maintain open communication with the lender, the family member and any other relevant parties throughout the process. Address any questions or concerns promptly and keep everyone informed of the progress.
Perhaps this process feels too complicated or the lender does not allow you to move forward with the process. You do have other alternatives including:
While it may be possible to transfer a car loan to a family member for a number of reasons, there are also some alternatives in case the car transfer is not a possibility. FINN is a valuable alternative to helping with your current situation. It will allow flexibility, along with ease of use. Explore your dream car with FINN today and learn how you can have a quality vehicle delivered directly to your doorstep.
1. Choose your perfect car
Pick your next car and select the term and mileage package that’s right for you.
2. Get approved in a few clicks
Submit your information and get approved in under five minutes.
3. Delivery straight to your home
Schedule for FINN to deliver your new car at a convenient date so you can focus on the road ahead.
4. Just hit the road and swap when you’re done
All that’s left to do is drive. When your term is over, you can return the car and pick out something new, or simply walk away.