Yes, you can transfer a car loan to another person through a process called an auto loan assumption. However, it's not simple or commonly allowed. The most critical step is contacting your lender, as the original loan agreement must explicitly permit a transfer. Most standard auto loans include a due-on-sale clause, which requires the full loan balance to be paid off if the car is sold or transferred, effectively preventing an assumption.
If your lender allows it, the person taking over the loan must undergo a full credit application and meet the lender's approval standards. This process protects the lender by ensuring the new borrower is financially capable. The main advantage for you is a clean release from the debt. For the new borrower, they might get a car without a large down payment. The primary disadvantage is the complexity and the high likelihood of denial.
If a transfer isn't possible, your main options are selling the car and paying off the loan (you'll need to cover any difference if you have negative equity) or using a co-signer release clause if your original loan has one, which removes your obligation after a set number of on-time payments.
| Key Consideration | Description | Likelihood / Impact |
|---|
| Lender Approval Required | The lender's permission is mandatory and not guaranteed. | Low (Most lenders deny) |
| New Borrower Credit Check | The assuming person must pass a creditworthiness assessment. | High (Standard procedure) |
| Due-on-Sale Clause | A standard clause that triggers full loan repayment upon transfer. | High (Present in most loans) |
| Release of Liability | Successfully transferring the loan removes your legal responsibility for the debt. | High (If successful) |
| Alternative: Selling the Car | A more common path involves selling the car and using the proceeds to pay off the loan. | Very High (Most common solution) |
Ultimately, while a possibility, transferring a car loan is an uphill battle. Directly selling the vehicle is almost always a more straightforward path to getting out of the loan.
