How to Refinance a Car Into Someone Else’s Name

Getting out of a car loan can be difficult, especially when you want to transfer it to someone else’s name. While directly refinancing a car into someone else’s name is typically not feasible, there are alternative approaches to shift responsibility for the loan.

As mentioned, it’s pretty much impossible to refinance a car loan in your name to someone else’s. However, you do have some options to get out from under that loan.

The most straightforward method to transfer an auto loan to another individual is by selling the vehicle to them. However, this process involves certain complexities, particularly if you still owe money on the loan.

To facilitate the sale, the buyer needs to shop around for lenders that offer auto loans. A good place to start may be to ask at their regular bank or credit union, since they already have a relationship with that financial institution. The buyer may also want to consider an online car loan or personal loan.

Next, you’ll need to coordinate with the buyer to settle the remaining balance on your auto loan. Lender processes vary depending on the loan type and other factors, but the new auto lender may want to pay off the previous lender directly. If it’s a personal loan, the funds may be given to you to settle up your loan.

Finally, you’ll need to complete the necessary paperwork for transferring ownership according to your state’s requirements. This may involve a title transfer, bill of sale, and other documents, depending on where you live and the loan type.

If selling the car is not an option, another route is to refinance the loan twice to remove your name from the financing arrangement. However, this method can be more complex and time-consuming.

The process typically involves refinancing with a cosigner or co-borrower, where both you and the other party take out a new loan, updating the car’s title with both names. Keep in mind that with a co-borrower, you’ll both need to have good credit to qualify for the loan. If you apply with a cosigner, their credit is more strongly weighted.

After that, the cosigner or co-borrower can then apply to refinance the car in their own name. However, securing a new loan in one name only can be tricky to qualify for, depending on the sole applicant’s credit score, income, and other qualifications.

It’s important to note that each refinancing step may impact credit scores and may incur additional fees.

If transferring the car loan to someone else’s name proves challenging, there are some alternative strategies to reduce expenses.

While not a means to exit the loan, refinancing with a cosigner can lead to savings by potentially securing a lower annual percentage rate (APR) and better terms. This method could at least result in reduced interest charges and monthly payments. Keep in mind that you’ll need a cosigner with good-to-excellent credit to get the best rates.

Improving loan terms and saving money could also be achieved by refinancing by yourself. This is especially true if your credit score has improved, if your vehicle has equity, or if interest rates have gone down since taking out the original loan.

Downsizing your vehicle or opting for a more affordable option can significantly reduce auto loan expenses. Keep in mind that private sale transactions often yield better returns compared to trading down at a dealership.

Exploring options with your lender for loan modifications or hardship assistance can provide relief by adjusting contract terms, potentially lowering monthly payments, interest rates, or fees. Financial hardship situations, such as unemployment, a death in the family, or medical expenses, may qualify for assistance.

Directly transferring a car loan into another individual’s name is typically not feasible. However, alternative methods, such as selling the vehicle or refinancing with a cosigner, can achieve a similar outcome.

Yes, each refinancing application, whether with or without a cosigner, may impact credit scores. Whenever you apply for a loan (or credit), the lender will do a hard credit check that drops your score a few points. However, as long as you manage the loan responsibly and make on-time payments, a car loan can ultimately raise your credit scores.