Can You Transfer an Auto Loan?

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Even with poor credit.

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Meghan Carbary has been writing professionally for nearly 20 years. A published journalist in three states, Meghan honed her skills as a feature writer and sports editor. She has now expanded her skill-set into the automotive industry as a content writer for Auto Credit Express, where she contributes to several automotive and auto finance blogs.


, - January 13, 2020

You can't just sign over a car loan to someone else when you haven't finished it. However, in some cases, it may be possible for someone else to assume your loan. Auto loan assumption means that a new borrower qualifies through your lender to take over your loan, although this isn't widely available.

Letting Someone Assume Your Loan

Loan assumption isn't something that's allowed by all lenders. It can help you to avoid repossession if you're no longer able to keep up with the monthly payment. You just have to find someone that wants to take over your vehicle and loan.

However, the process is much like getting a car loan. First, the lender has to allow assumption, then the new borrower must qualify for the existing loan. In this process, the terms, conditions, and payment due date aren't likely to change, so the new borrower is measured against these guidelines. If they qualify, they sign a contract to assume the loan and it becomes theirs.

Not only is this process not widely allowed, it's also difficult if the new borrower has poor credit. However, there are other options available if you need to get out of an auto loan you have.

Refinancing an Auto Loan

If the problem isn't so much that you want to be rid of the car, but you just can't afford your payment, you may be able to refinance the loan. In order to qualify for refinancing, your credit score must be good – or at least improved since taking it out if you have a bad credit auto loan.

You can check with your lender to see if they're able to help, but refinancing most often means taking out a new loan for your vehicle with a new lender. The only reason you should look to refinancing is to lower your monthly payment. This is done by either qualifying for a lower interest rate or extending the loan term.

Sell the Vehicle for Profit

If you still owe on a car, but are trying to get out of the contract, you may be able to sell the vehicle yourself in order to pay off the loan.

To do this, your car must be worth enough, or you have to at least sell it for enough, to cover the loan balance. Otherwise, the lender won't release the lien so the title can be transferred.

Trade In for a More Affordable Car

If you don't want to go through the hassle of selling the vehicle yourself, you can always trade the car in. In order to get the best price from a dealer, make sure you get it appraised by at least three dealerships, and make sure that one of them sells the same make as your vehicle.

If there's enough equity in your car, you can trade it in, pay off your existing loan, and use the remainder as a down payment on another vehicle. If your car has negative equity, meaning you owe more on the loan than it’s worth, you have to either pay the difference out of pocket, or find a lender that lets you roll over your negative equity.

Rolling over negative equity is a risky move if you're struggling with bad credit, so be careful. When you do this, the dealer pays off your existing loan, but adds the negative equity to your new loan, which could put you right back in a situation where you're having trouble keeping up with your payment.

Finding the Option That Works for You

Once you decide on the solution that's right for you, we want to help you find an affordable vehicle and the dealership that can provide it. If you don't know where to start, you're in luck because you're already in the right place.

Here at CarsDirect, we not only have the inside scoop on all the new and used cars you need to know about, we can get you matched up with a local special finance dealer.

We work with a coast-to-coast network of dealerships that have lending solutions for bad credit borrowers. Don't hesitate any longer! Simply fill out our fast and free auto loan request form to get started today.

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Meghan Carbary has been writing professionally for nearly 20 years. A published journalist in three states, Meghan honed her skills as a feature writer and sports editor. She has now expanded her skill-set into the automotive industry as a content writer for Auto Credit Express, where she contributes to several automotive and auto finance blogs.


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