Can You Transfer a Car Loan to Another Person?

Written by: Jacob S.

Published on: January 15, 2025

Updated on: June 4, 2025

If you’re dealing with a car you can’t afford or want to give to someone else — maybe your spouse, daughter, or another relative — you might wonder: Can I transfer my car loan to someone else? The short answer is yes, in some cases. But it depends on your lender, your credit, and the person taking over the loan.

Here’s everything you need to know about how car loan transfers work — especially when family or bad credit are involved, plus alternatives like transferring to another car, bank, or even a credit card.

Can You Transfer a Car Loan to Someone Else?

In most cases, a car loan cannot be transferred without lender approval. Auto loans are tied to both the car and the borrower’s credit, so lenders want to ensure the new person is creditworthy.

To transfer a car loan to someone else’s name, here are the general steps:

Contact your lender. The first step in transferring a car loan is to get in touch with your lender. Not all lenders permit car loan transfers, so it’s important to clarify whether they allow such a transaction. If they do, ask for specific instructions, fees, and any additional conditions required for the transfer. You may be asked to provide details about the person you wish to transfer the loan to.
Apply for transfer. Once you’ve confirmed the transfer is allowed, both parties will need to submit an application for the transfer. This typically includes providing financial documents, personal identification, and information on the car’s current status. The lender may require both the buyer and the seller to provide consent before proceeding.
Credit Check. The person taking over the loan will usually have to go through a credit check to ensure they are financially capable of managing the loan. The lender will evaluate their creditworthiness to make sure the new borrower meets the necessary requirements.

It's also important to consider their debt-to-income ratio for a car loan, as this can impact the lender's decision. If the new borrower is approved, the lender will finalize the transfer.
Title and registration update. Once the transfer is approved, you will need to change the title and registration of the vehicle to reflect the new owner. This step typically involves visiting your local Department of Motor Vehicles (DMV) to update the records. Make sure that all ownership documents are in order before finalizing the transfer.

Should You Transfer a Car Loan to Another Person?

Transferring a car loan to another person may seem like a quick solution to get out of a financial bind, but it’s essential to weigh the pros and cons. Before proceeding, consider:

The other person’s financial capability. Ensure they can make the loan payments consistently.
Their willingness to take responsibility. Confirm they are fully aware of the financial and legal obligations involved.
Your loan agreement’s terms. Review whether the lender permits loan transfers and check for any associated fees.

Ultimately, transferring a loan can help you avoid default, but it requires careful planning and consideration.

Pros of Transferring a Car Loan

Transferring a car loan can be an effective solution in certain situations, particularly when you’re dealing with financial or personal challenges. Key advantages include:

Relief from Financial Burden

Helps you avoid default if you’re struggling to meet payments.
Reduces financial stress during life events like job loss, medical emergencies, or major income changes.

Preservation of Credit

Prevents late payments or repossession, protecting your credit score for future financial needs.

Supportive Agreements

Family members or close friends may be willing to take over the loan, creating a mutually beneficial solution.

Cons of Transferring a Car Loan

While transferring a loan can be helpful, it comes with challenges and risks. Consider these factors:

Approval from the Lender

The lender must approve the new borrower, which often requires a credit check and proof of financial stability.
If the new borrower doesn’t meet the lender’s requirements, the transfer won’t proceed.

Legal and Financial Implications

Transferring the loan involves changing the car’s title, registration, and insurance.
Both parties must fully understand their responsibilities and potential risks to avoid misunderstandings.

Potential for Relationship Strain

Transferring a loan to someone you know can lead to conflicts if payments are missed or financial issues arise.

Fees and Costs

Some lenders charge fees for processing loan transfers, adding to the overall expense.

By thoroughly weighing these pros and cons, you can make an informed decision about whether transferring your car loan is the best option for your situation. Open communication with all parties and a clear understanding of the process are essential to ensure a smooth transition.

How to Transfer a Car Loan to a Family Member

Maybe you’re moving, downsizing, or gifting the car to a wife, daughter, or spouse. Transferring a car loan to a family member is possible, but only if your lender allows it and your family member qualifies.

Example Scenarios

To your wife or husband. If your spouse has better credit or a more stable income, they might take over the loan to help you out.
To your daughter or son. Helping a child get started with a vehicle? Transferring a car loan may be a financial gift, but ensure they understand the associated responsibility.
To other relatives or parents. Maybe you’re giving up your car for a parent or other relative in need. Be prepared to go through a full transfer process.

Important: The lender's approvl is only based on the new borrower's ability to repay, not your relationship with the individual.

Transferring a Car Loan With Bad Credit

What if you or the person taking over the loan has bad credit?

If You Have Bad Credit

The lender might still approve the transfer if the new borrower has good credit.
If you're behind on payments, it could hurt their chances of being approved.

If They Have Bad Credit

It’s unlikely the lender will approve the transfer.
You may need to cosign or consider refinancing instead.

Can I Transfer My Car Loan to Another Car?

You can’t directly move a loan from one vehicle to another. However, you may be able to:

Refinance your loan with a lender who lets you roll over the remaining balance into a new loan.
Sell the car, pay off the existing loan, and use the remaining funds as a down payment on a new car.

Transferring a loan to another car usually involves getting a new loan entirely.

Can You Transfer Your Car Loan to Another Bank or a Credit Card?

Yes, but it’s not a traditional “transfer.”

To Another Bank

You can refinance your auto loan with a different bank or lender.
This is a common option for borrowers seeking better interest rates or different loan terms.

To a Credit Card

Some credit cards allow balance transfers, but this is generally risky.
You may receive a 0% introductory APR, but interest rates usually rise significantly after the promotional period ends.
Large balances may also exceed your credit card limit.

Be cautious: Transferring a car loan to a credit card could hurt your credit score if not managed properly.

Alternatives If You Can’t Transfer the Loan

If your lender doesn’t approve a transfer or the recipient isn’t eligible, here are some other options:

Refinance the loan. Lower your interest rate or monthly payment.
Sell the car. Use the sale proceeds to pay off the loan.
Lease transfer. If you have a lease, check if the leasing company allows a transfer.
Voluntary repossession. As a last resort, return the vehicle to the lender. This will damage your credit but may help avoid more severe financial consequences.

Is Transferring a Car Loan a Good Idea?

Transferring a car loan may seem like a quick fix for a challenging financial situation, but it’s important to understand whether it’s the best choice for you. While transferring the loan may ease the financial burden, it also comes with risks and complications. It’s essential to carefully consider the pros and cons before deciding to proceed.

Reasons to Transfer a Car Loan to a Family Member

Transferring a car loan to a family member can be a solution for various personal or financial reasons. Here are some common scenarios where a car loan transfer might make sense:

Reason for Transfer	What to Consider
You’re Moving	Ensure the family member taking over can handle the payments. Check if the car is transferable to a new location without additional costs.
You Can’t Afford the Car Payment	Confirm that the person taking over is financially stable and able to make regular payments. Ensure you avoid late fees or a damaged credit score.
You Want to Purchase a Cheaper Car	Make sure the transfer process won’t interfere with your ability to buy a new vehicle. Check if the lender allows loan transfers for this purpose.
You Want to Give a Gift	Consider whether the recipient can manage the ongoing payments. Be sure to discuss any expectations and responsibilities openly.

You’re Moving

If you're relocating to another area and can no longer afford the car or don’t want to take it with you, transferring the loan to a family member who is willing to take over the payments might be a reasonable solution.

You Can’t Afford the Car Payment

If you’re struggling with your car payment and are unable to make ends meet, transferring the loan to a family member who can afford the payments could help relieve your financial burden. This allows you to avoid missing payments or defaulting on the loan.

You Want to Purchase a Cheaper Car

If you're interested in purchasing a more affordable car but are still paying off your current loan, transferring your loan to a family member can help you get out from under the loan and buy a vehicle that better suits your budget.

You Want to Give a Gift

If you want to help a family member by transferring your car loan, doing so could be a way to provide them with a vehicle without having to buy one outright. This is often seen as a generous gift for a loved one in need.

What Happens If the Lender Does Not Agree to the Transfer?

If the lender doesn’t approve the transfer, you will need to explore alternative options. Here’s a breakdown of potential paths to consider:

Negotiating a payment plan. If transferring the loan isn’t approved, consider discussing a revised payment plan with the lender. Many lenders are willing to work with borrowers facing financial challenges to avoid default, such as temporary payment reductions or extended terms.
Seeking assistance from a credit counselor. Engaging a credit counseling agency can help you explore other options tailored to your financial situation. A professional counselor can negotiate with your lender or provide advice on how to handle your debt effectively.
Avoiding default. If you’re unable to transfer the loan, the most important priority is to stay current on payments. Falling behind can lead to late fees, repossession, and a significant hit to your credit score. Maintaining open communication with your lender is essential to avoiding these outcomes.

No matter the option you choose, it’s crucial to fully understand your rights and obligations. Carefully review your loan agreement, seek advice from financial professionals if needed, and weigh the long-term implications of each decision to protect your financial stability.

Alternatives to Transferring a Car Loan

If transferring a car loan doesn’t seem like the right solution, or the lender doesn't agree to the transfer, there are alternative options to consider. Some of these options may help alleviate your financial strain without needing to transfer the loan.

Refinancing. If you’re struggling with car payments, refinancing may lower your interest rate or extend your loan term, reducing your monthly payments. If you have bad credit, refinancing is not out of reach, you may just need to do some research for a loan provider.
Sell the car. Selling the vehicle can help pay off the loan balance. If you owe more than the car is worth, you may need to pay the difference out-of-pocket.
Voluntary repossession. As a last resort, you can return the car to the lender. This will damage your credit but may help you avoid more severe consequences like repossession.
Lease transfer. If you have a car lease, some companies allow lease transfers, which could be an easier alternative to a loan transfer.