You cannot actually transfer your car loan to another person. You can, however, sell your vehicle and ask the buyer to apply to your lender. This simplifies the selling process when a loan is involved. There is no guarantee of your buyer's approved monthly payment, interest rate, term or down payment requirements; approvals are based on personal credit information.
Selling Your Vehicle
Obtain your loan's payoff amount. You can sell your car for the amount you owe or more, if you want. If you simply want to get rid of your car and its loan, sell the vehicle for its payoff amount even if you're entitled to more. Check your car's private sale value at Edmunds.com and the Kelley Blue Book website. If you owe more than the vehicle's worth, you'll have to come up with the remaining balance due if the payoff exceeds your car's selling price. You can keep any profit you make if you sell the car for more than the loan amount.
Benefits of Using the Same Lender
Your buyer can apply to your lender. Because some states send the vehicle's title to the lien holder and not the borrower, the ownership transfer process is likely quicker. Expect to sign the title to release ownership. Once your buyer's application is approved, the bank can pay off your loan immediately and handle most of your paperwork. You'd likely have to wait for the title or lien release after paying off the loan if you and the buyer do not use the same lender.
Individual Loan Information
Your buyer's approval is based on the vehicle's value and his credit rating and history. Someone with poor credit may not obtain an approval for the requested loan amount, which is called a loan-to-value ratio. The borrower, depending on his credit, may obtain an approval for up to 120 percent of a vehicle's bank-determined value or as low as 60 percent. A down payment might be required. Poor credit might also affect the loan's term and interest rate. The buyer's monthly payment may be higher than yours for this reason.
Other Options
If your buyer can't obtain an approval similar to yours, you can offer to cosign the loan. If you don't know the buyer, consider selling the vehicle on your own for the vehicle's private sale value. Call your lender to find out the process involved with selling your car; the process to complete paperwork can take several weeks. In most cases, you can bring your buyer to your lender to pay off the loan and receive the lien release immediately. However, some banks do not handle loan payoffs, titles or lien releases at a local branch.
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