how to take over someone else's car loan

[Reese]

The process of taking over someone else's car loan, known as a loan assumption, is possible but not common. The core requirement is obtaining approval from the lender that holds the original loan. The new borrower must pass a credit check and meet the lender's underwriting standards. If approved, the original borrower is released from liability, and the new borrower assumes all payments. However, many lenders do not permit assumptions, so the most common route is a private party sale where the buyer secures their own new loan to pay off the seller's existing one.

Is a car loan assumption possible? It depends entirely on the lender's policies. Some lenders, particularly credit unions or those financing certain brands, may have a formal assumption process. Most major banks and auto finance companies do not. Contacting the lender is the essential first step.

The Step-by-Step Process

1. Contact the Lender: The current borrower must call the loan servicer to inquire about an assumption. Ask specifically about their policy, required fees, and the new borrower's minimum credit score.
2. Qualify the New Borrower: The person taking over the loan will undergo a full credit application. Their income, debt-to-income ratio, and credit history must be strong enough to qualify for the remaining loan balance on their own.
3. Vehicle Appraisal: The lender will require a current vehicle valuation to ensure the loan-to-value ratio is acceptable. If the car is worth less than the loan balance (upside-down), the new borrower may need to pay the difference in cash.
4. Sign Paperwork: If approved, the lender will prepare assumption documents. Both parties sign, officially transferring responsibility. The title will be updated to reflect the new owner and lienholder.

Alternative: The Private Sale Method Since assumptions are rare, a private sale with a new loan is often simpler. The buyer gets financing from their own bank or credit union. The funds from the new loan are used to pay off the seller's existing loan at closing, with any excess going to the seller or any deficit covered by the seller.

Key Considerations for an Assumption

Consideration	Impact
Lender Approval	The absolute gatekeeper; without it, the process stops.
New Borrower's Credit	Must be as good as or better than the original borrower's was.
Loan-to-Value Ratio	A significant disparity between the car's value and the loan amount can derail the deal.
Liability Release	Ensure the original borrower gets a formal release from the lender to protect their credit.

Ultimately, while an assumption can be a smooth transfer, the private sale route is typically more straightforward for both parties.

[LaOwen]

From my experience helping folks with this, it's a paperwork headache. Most banks just say no. The easier way is to treat it like a regular sale. You get your own loan from your bank, use it to pay off what they owe on the car, and the difference changes hands. It's cleaner, and you're not stuck with their loan terms. Just make sure you both meet at your bank or theirs to handle the payoff correctly.

[Francisco]

I looked into this when my sister wanted my car. Your first call should be to the finance company. Ask them point-blank: "What is your policy for assuming an auto loan?" Get the answer in writing if you can. They'll tell you the credit score needed and any fees. If they allow it, be prepared for a hard credit inquiry. The car's current value is a huge factor—if you owe more than it's worth, you'll need cash to cover the gap.