How to Transfer a Car Loan to a Family Member

How to Transfer a Car Loan to a Family Member

If you’ve ever considered transferring your car loan to a family member, you’re not alone. Life is full of unexpected twists and turns, and there may come a time when you need to pass on your car loan to a loved one. Whether it’s due to financial reasons, a change in circumstances, or simply a desire to help out a family member, this guide will walk you through the process how to transfer a car loan to a family member smoothly and legally.

Understanding the Basics

Before we dive into the steps involved in transferring a car loan, it’s essential to understand some fundamental concepts.

1. What is a Car Loan Transfer?

A car loan transfer, also known as loan assumption, is the process of transferring the responsibility for an existing auto loan from one person to another. This typically involves the lender approving the transfer and the new borrower taking over the remaining loan balance.

2. Why Transfer a Car Loan?

There are several reasons why you might consider transferring your car loan:

  • Financial Assistance: You may want to help a family member who is struggling financially.
  • Ownership Change: If you’re gifting or selling the car to a family member, transferring the loan is often necessary.
  • Refinancing Opportunity: The new borrower may have better credit, allowing for lower interest rates.
  • Relocation: If the borrower is moving to another state or country, a loan transfer can simplify matters.

3. Is it Legal?

Car loan transfers are generally legal, but they are subject to the terms and conditions set by your lender. It’s crucial to check with your lender and ensure that they allow such transfers.

Steps to Transfer a Car Loan

Now that you have a basic understanding, let’s go through the steps involved in transferring your car loan to a family member.Steps to Transfer a Car Loan

Step 1: Contact Your Lender

Begin by contacting your lender to inquire about their specific policies regarding car loan transfers. Not all lenders permit this, so it’s essential to check and see if it’s a viable option.

Step 2: Check Creditworthiness

Your family member will need to prove their creditworthiness to the lender. They should have a good credit score and a stable financial situation to qualify for the transfer.

Step 3: Complete the Application

If your lender allows it and your family member is eligible, both parties will need to complete the necessary application forms. The lender will review the application and make a decision.

Step 4: Approval and Documentation

Upon approval, the lender will provide documentation outlining the terms of the transfer. Ensure that both parties understand and agree to these terms before proceeding.

Step 5: Transfer the Title

To complete the process, you’ll need to transfer the car’s title to your family member. This typically involves a visit to your local Department of Motor Vehicles (DMV).

Step 6: Notify Insurance

Don’t forget to update the car insurance policy to reflect the new owner or co-owner.

Step 7: Make Timely PaymentsMake Timely Payments

Even after the transfer, keep an eye on the loan to ensure timely payments are being made. Any default can affect your credit.


Transferring a car loan to a family member can be a generous gesture and a practical solution in various situations. However, it’s crucial to follow the proper steps and consult with your lender to ensure a smooth and legally sound transition.


  1. Can I transfer my car loan to anyone in my family?

Not necessarily. Lenders have specific criteria, so check with your lender to see who qualifies as an eligible family member.

  1. Can I transfer my car loan if I still owe a significant amount on it?

Yes, you can transfer a car loan with an outstanding balance, but your lender may have specific guidelines for this situation.

  1. Is there a fee for transferring a car loan?

Some lenders may charge a fee for processing the transfer. Check with your lender for details.

  1. Can I transfer my car loan if I have a bad credit history?

It’s unlikely, as most lenders require a good credit score for the new borrower. A family member with better credit might be a more suitable candidate.

  1. What happens if the new owner defaults on the loan after the transfer?

If the new owner defaults on the loan, it can negatively affect your credit score, as you are still legally responsible for the loan until it’s paid off.

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