Can You Refinance a Car Into Someone Else’s Name?
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Getting out of a car loan can be tricky. It’s nearly impossible to get your name removed from a car loan, since you agreed to take full legal responsibility when you signed the loan contract.
So if you’re wondering how to refinance a car in someone else’s name, the truth is it’s not easy. But the good news is that there are other ways to let somebody take over responsibility for the financing. While you could refinance your car into someone else’s name, there are easier ways to get rid of your vehicle or lower your payments.
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How to refinance a car into someone else’s name
Even though you can’t usually refinance a car into someone else’s name, there are a few ways you can shift responsibility for your loan to a new person.
Sell it
The simplest way to get an auto loan into someone else’s name is to sell the vehicle to them. But be aware that selling a car when you still have a loan has its drawbacks.
Unless the interested buyer has cash for the purchase, they’ll need a new loan to pay off what you owe. Here’s what the process could look like:
- Shop around. Find a lender who offers private-party auto loans or consider a personal loan. Either way, the buyer will need to qualify for a new loan based on factors like their credit scores and income.
- Pay off your loan. Coordinate with your buyer to pay off the remaining balance on your auto loan.
- Process the paperwork. Finalize the sale by filing your state’s required paperwork for transferring ownership.
Refinance it twice
If you’d rather not sell, you can refinance twice in order to remove your name from the new loan. This process can be much trickier and more time-consuming than selling your car. Generally, the process goes like this:
- Refinance with a cosigner. Both you and the cosigner will take out a new refinance loan, and the car’s title will be updated with both your name and the cosigner’s name.
- Have the cosigner refinance alone. Next, the cosigner will take out an auto refinance loan for the car on their own. But first, they’ll have to find a lender that will approve them based on their own qualifications. The new owner may also need to wait for some time to pass before a lender will approve a new refinance.
Keep in mind that every time you or your cosigner takes out a new loan, you may take a hit to your credit scores, and you may have to pay loan origination or application fees to the lender.
Other ways to save money on an auto loan
If you’re wondering how to refinance a car in someone else’s name, you might need to consider a different solution. If your ultimate goal is to save money, consider one of the following options instead:
Refinance with a cosigner
Refinancing with a cosigner won’t get you out of a car loan, but it could save you some cash. That’s because having a cosigner on your auto loan can help you qualify for a lower APR and better terms, which can mean lower interest charges and lower monthly car loan payments.
No, your cosigner doesn’t have to have better credit than you, but the higher their scores are, the more likely the two of you are to qualify for an auto refinance loan with competitive rates.
Refinance alone
Another way to improve your loan terms and save money is to refinance by yourself. You might qualify for a better loan by refinancing if:
- Your credit scores have improved since you took out your current loan.
- Your vehicle has equity, meaning it’s worth more than you owe on the car loan.
- Interest rates have dropped since you took out your original loan.
You could also get more affordable monthly payments by spreading out your repayment over a longer timeframe. Just keep in mind that the longer your repayment term, the more you’ll pay in interest charges.
Buy a more budget-friendly car
Another way to reduce your auto loan expense is by downsizing your car. That doesn’t necessarily mean you have to get a smaller vehicle, but it does mean choosing a car that’s less expensive due to age, mileage or other factors.
While trading down at a dealership can be a convenient option, you’ll get more money for your vehicle if you do a private sale and then purchase your next car separately.
Request a loan modification
You may also be able to reduce your loan costs by working directly with your lender.
Some lenders offer loan modifications, which allow you to change the terms of your contract, while others may offer special hardship assistance options. Depending on the lender, this could include a reduction in your monthly payments (through spreading out your repayment over a longer period), lower interest rates and/or fees.
If you’re interested in a loan modification, contact your lender to see what’s available. You’re most likely to qualify if you’re experiencing financial hardship, such as:
- Unemployment or reduced income
- Disability
- Medical expenses
- Divorce
- Death of a spouse
Frequently asked questions
Most auto loan contracts don’t allow you to transfer a car loan to someone else. If someone wants to take over financial responsibility for your car, they’ll most likely need to buy the car from you by taking out a new loan in their own name.
You cannot add a cosigner to your car loan, since the contract has already been signed. If you want to add a cosigner, you’ll have to refinance your vehicle with a lender that allows cosigned applications.
Refinancing your car loan can cause your credit scores to drop. When you refinance, you initiate a few different events that can have a negative impact on your credit scores, including hard inquiries and opening and closing loan accounts. In the long term, however, your credit scores can improve as you make on-time loan payments and pay down your debt balance.