To transfer an auto loan, the person you intend to transfer to must apply to your lender for the vehicle's payoff amount. Technically, you are selling your car and the person you are transferring to is considered the buyer. The buyer must pay taxes on the newly acquired vehicle (if required in his state), register and insure it. The buyer might also get a different interest rate.
Bank Contact
Call your bank to inquire about the application process and procedures for paying off your car loan when a buyer applies to the same bank. You will need the vehicle's payoff amount to give to the buyer; this is the amount he will have to apply for. Ask also for the vehicle's per-diem amount, which is the cost of interest added daily, and add it to your payoff amount. The bank will most likely request that the buyer come into the bank, if it is local, or call to complete a credit application.
Application Process
Give the buyer your vehicle information. He will need its year, make, model and VIN (vehicle identification number). The bank should have your vehicle's information on record, but let the buyer know your exact odometer mileage, which affects the lending value of the car. The buyer can expect to provide his Social Security number, address and employment information for the credit application. Once the application is submitted, the buyer should find out within a few days whether or not the application is approved. Once the buyer notifies you of the approval, contact your lender for further instruction.
Insurance Requirements
Once the loan is approved, the buyer must provide a full coverage insurance policy for the car, just as you had to, before taking full possession of your vehicle. The bank will let the borrower know its insurance coverage requirements; you do not have to. Once the applicant provides proof of insurance, he can go to a state motor vehicle office to complete the registration process. You may have to provide a signed title to the bank or buyer, depending on your state's requirements. If you live in a title-holding state, the bank will handle the title process for you.
Transferring Vehicle Ownership
Once the buyer's loan is complete and yours is paid off, you can fully complete the vehicle transfer. Give all sets of keys, the owner's manual and any other relevant vehicle accessories or parts to the buyer. If you have saved your service and repair history receipts, give him those as well. Take your plates off of the car; the buyer should have his own to use. Call your insurance company immediately to cancel your policy and follow your state's procedures for handling license plates.
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