Yes, you can transfer a car to someone else during financing, but it is not a simple process and requires the lender's approval. The person taking over the payments will need to qualify for the loan based on their creditworthiness. If the lender does not approve the transfer, the original borrower remains legally responsible for the payments.
The primary hurdle is that the lender holds the vehicle's title as collateral until the loan is fully paid off. This legal arrangement means you cannot freely transfer ownership without involving the finance company. The most common method for transferring a financed car is through a loan assumption. This is a formal process where the lender assesses the new buyer's credit, income, and debt-to-income ratio. If approved, the new buyer assumes all responsibility for the remaining loan balance.
If a loan assumption isn't possible, your options are more limited. You could sell the car and use the proceeds to pay off the loan, but this is risky if you have negative equity (meaning you owe more than the car's current market value). You would need to cover the difference out-of-pocket to complete the sale.
| Lender Type | Likelihood of Allowing Assumption | Common Requirements |
|---|
| Major Banks/Credit Unions | Low to Moderate | Excellent credit score (700+), stable income, formal application |
| Captive Lenders (e.g., Toyota Financial, GM Financial) | Very Low | Often prohibited by original loan agreement |
| "Buy-Here, Pay-Here" Dealerships | Extremely Low | Designed for in-house, non-transferable financing |
Before proceeding, contact your lender directly to understand their specific policies. Be prepared to provide the potential new owner's information. It is also highly recommended to consult with a legal professional to draft a formal agreement that protects you, even after the assumption, as some lenders may still hold the original signer partially liable.
