Can You Transfer an Auto Loan to Another Person?

People who sign their names on the dotted line of an auto loan must fulfill the terms of that loan until they pay off the vehicle unless they can find someone who is willing to purchase their vehicle. Even so, car owners may put themselves in a financial fix if they take shortcuts to transfer their loan obligations to another person.

Titles

Auto lenders hold the titles to borrowers' vehicles until they pay off their loans. Therefore, you generally can't transfer an auto loan to another person because you need to transfer the title to that person as well. An Edmunds article titled "What To Do if You Can't Make Your Car Payment" says an auto loan must be paid off before a title can be transferred to a new owner, which is usually handled by selling the vehicle to the new owner.

Swapping Loans

According to Cars Direct, you can swap loans even though you can't directly transfer your auto loan to another person. A car owner swaps a loan by having the person who wants to buy his vehicle take out another loan for the purchase price and giving the money to the owner. The owner uses the money to pay off the balance of his auto loan and turns the car over to the new owner. The new owner eventually pays off the loan he took out to pay the purchase price and takes title of the vehicle since the previous owner paid off the original loan.

Payment Agreements

Avoid the temptation to allow someone to make your auto loan payments without requiring that person to take out his own loan and take title to the vehicle. In such cases, the original loan remains in your name. Therefore, your credit score will drop if the other person fails to make payments or fails to pay on time. Furthermore, you put your vehicle at risk of repossession if that person fails to pay off your loan as agreed.

Considerations

You protect yourself from financial hassles and personal conflicts if you require someone who wants to buy your vehicle to get a loan in his own name. A lender will subject the buyer to a credit check and income verification to ensure the person is creditworthy and can afford to pay the loan. Furthermore, it's the lender's problem if the buyer gets a loan and doesn't make the payments. That spares you the hassle of trying to retrieve late payments yourself.