Auto Loan Refinance In Someone Else’s Name

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Bethany Hickey is a Content Manager and Writer for Auto Credit Express, CarsDirect, and many other automotive blogs. She's a graduate from the University of Michigan-Flint, with a bachelor’s in English-Writing. 

, Content Manager - May 25, 2021

Someone can’t just take over your loan – they must finance the car themselves. But, if you don't want to go through the whole process of selling them your vehicle, they may be able to apply for a refinance auto loan. Here’s what you need to know about refinancing and how to transfer a car to someone else.

Refinancing a Vehicle

Refinancing is when you get a new loan for the same vehicle. It’s defined as replacing existing debt with new debt, hopefully with more favorable terms. The old loan is paid off so you can start a new auto loan contract for the same car. Most borrowers refinance their vehicles to get a lower monthly payment. It can be a great way to get a lower interest rate, which can save you money when you’re borrowing.

However, if you don’t want the vehicle anymore and someone wants to refinance it in their name, you need to sell it to them. In a sense, when you sell a car to someone else and they finance it, they’re “refinancing” that vehicle in their name – replacing a loan for another one!

When you have an auto loan on a vehicle, your name's on the loan, and you have an obligation to repay the loan balance. You can’t talk to your lender and just request to hand over responsibility for that loan to someone else. Your original loan must be paid in full either by you, another lender, or the person purchasing your car, for you to be free and clear.

How to Refinance a Private-Party Car

If you want to transfer your vehicle to someone else, the buyer needs to apply for a refinancing auto loan with a direct lender. Third-party lenders that are signed up with dealerships don’t typically finance or refinance private-party transactions. If the person who wants the car is approved for financing, this loan is used to pay off your lender, so they can register the vehicle in their name and relinquish your responsibility to the vehicle and loan.

Your main goal as the seller is to get an offer large enough to pay off your existing auto loan, which releases the lien on the title. Figuring out how much you need to pay off your loan can be pretty simple. You can usually contact your lender and request a 10-day payoff amount, which is your loan balance with 10 days of interest charges included. Or, if you have access to your loan via an online portal, you can check your remaining loan balance there.

Once you have your loan balance, you can relay that amount to the person looking to refinance your vehicle, so they know how large of a loan they need to apply for. Your buyer is likely to need your vehicle’s information, as well, such as its manufacturer, year, mileage, condition, and vehicle identification number (VIN). If the lender approves the loan for your buyer, their lender can send a check to your lender, removing the lien and signing the title over to the new owner.

With the lien removed, you and the buyer can then head to your local Department of Motor Vehicles (DMV) or Secretary of State to transfer ownership, unless this is taken care of by the refinancing lender.

What if My Buyer Can’t Get Approved for Financing?

Getting approved for a direct loan can be tough unless you have decent credit. Most traditional direct auto lenders require their borrowers to have a credit score above 660. If your buyer can’t get approved for financing, cash is always king!

Paying cash for a vehicle isn’t always an option for many people, though. If you want to sell your car, but your buyer can’t get the funds they need, then it may be a good idea to consider trading in your vehicle for something else.

Right now, used car values are very high. There are a few factors at play, but it’s largely due to the fact that new-car production is down thanks to last year’s factory shutdowns. With a lacking new stock, dealers are, on average, paying more for used cars right now.

To check the value of your vehicle, you can call around to a few dealerships in your area or visit websites like Kelley Blue Book or NADAguides. These resources can give you a rough estimate of your car’s value so you can put it up for sale or gain some negotiation power with a dealership.

We’ve Got Auto Loan Connections for Poor Credit Borrowers

At CarsDirect, we’ve dedicated the last 20 years to helping bad credit borrowers find the lending resources they need to get a vehicle. Using our nationwide network of special finance dealerships that are signed up with subprime lenders, we want to look for a dealer in your local area that assists borrowers with credit challenges.

Fill out our free auto loan request form, and we’ll get right to work looking for a dealership near you.


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, Content Manager

Bethany Hickey is a Content Manager and Writer for Auto Credit Express, CarsDirect, and many other automotive blogs. She's a graduate from the University of Michigan-Flint, with a bachelor’s in English-Writing. 

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