Must the Auto Loan Borrower and the Car Owner Be the Same Person?
2 Answers
Auto loan borrower and car owner must be the same person. If the borrower and the owner are different individuals, it poses significant risks and is legally prohibited. Having different parties for the loan and ownership may lead to payment defaults during repayment or the risk of the vehicle being mortgaged by others. Lenders typically reject such loan applications to mitigate risks. If the borrower fails to make timely repayments, banks or financial institutions will take action according to the contract's default clauses. If an individual already has a car purchased through a loan that is still being repaid, they can still apply for another auto loan, provided they have eligible collateral to secure the new loan.
Actually, the auto loan borrower and the vehicle owner don't necessarily have to be the same person. I've seen some friends encounter this situation when buying cars, such as parents wanting to use their own name to take out a loan to help their child purchase a car, but registering the vehicle under the child's name. However, most banks and financial institutions tend to be quite cautious about this, because they worry that if the borrower is not the owner, it would be difficult to effectively handle the vehicle as collateral in case of repayment issues. I remember helping a relative with this once, and the bank required additional guarantees or proof of the parent-child relationship, making the process quite troublesome. So generally speaking, keeping the borrower and the owner the same is the most straightforward approach. If you really need to separate them, it's advisable to consult the lender's specific policies in advance and prepare the necessary documentation to avoid making a wasted trip.
