How does taking over a car loan work? Can I take over another person’s car loan? Can another person take over my car loan? These are some critical questions most car borrowers find themselves wanting answers to when the going gets tough.
That is why I have decided to tackle this all important question in this article which I believe will be of great help to anyone who finds him/herself in a position where he or she may be considering this option.
Sticking to a payment plan for 36, 48 or 60 months isn’t as easy as it may look and many a times lots of borrowers end up struggling to pay back their loans. Sometimes the excitement of owning your own car can make you forget or ignore some basic things like asking yourself if you can really pay back the loan to the later bearing in mind any unforeseen circumstances.
And then in most cases sooner than later realise they won’t be able to pay back their car loan. That is when this idea of taking over car loan comes in. The statistics are there to prove how people are struggling to pay back their loans.
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Can Someone Else Take Over My Car Loan?
Yes! But not as simple and straightforward as it may sound. There are certain boxes that must be checked for a take over to be possible.
You must first consult your lender to find out if a transfer is possible and what the steps are to transfer your car loan to another person. From there, you need to find someone or a borrower who is willing and capable of taking over your car loan.
The lender will then want to assess the one taking over your car loan to determine if they can really take up the loan by checking their credit score, credit history etc.
They treat such new borrowers as though they are now taking up a new loan hence will take them through all or almost all the steps they took the original borrower through before granting them the loan. Once they are okay with everything, the take over can then take place and complete the transfer of title.
What Else You Can Do Instead Of Allowing Someone To Take Over Your Car Loan
The struggles involved in transferring your auto loan to another person should be discouraging enough to make you want to look at some other options you can take advantage of if you’re having difficulty in paying back hour loan.
These are a few alternatives you can opt for;
- Sell Your Car: so rather than transferring your car loan to another person which is usually difficult, you can actually sell it if you realise you can no longer put back the loan. It is quite easier to do and less stressful. All you have to do is find out what the present value of your car so that you don’t underprice it.
- Try Refinancing: another option available to you is refinancing your old car loan. You can do that with your current lender if they allow for refinancing or better still apply for refinancing elsewhere. With refinancing, you may want to go in for a deal that comes with a lower interest rate, reduce monthly payments and also extend the loan duration.
- Trade-In Your Car: you may also want to trade-in your car for a less expensive one if you are finding it difficult to make the current monthly payments. The good thing about this is you still get to one car although not the same value as the previous one. Its an advantage for you if the value of your car at the time of trading-in is higher than your current loan balance as the difference is treated as down-payment hence potentially reducing your monthly payments.
READ ALSO: How Does Car Finance Work in the UK?
After reading the above paragraphs, I’m sure you may be rethinking your decision to allow someone else take over your car loan or your plans of taking over another person’s loan, and rightly so.
As an original borrower who is thinking about letting another person take over your car loan, you may want to explore other options that are less complicated than transferring your car loan. There are better alternatives you can go in for instead of transferring your car loan. Hence examine those options and choose the one that is best for you.
And also, borrowers who are tempted to take over another person’s car loan should flee from such temptations as fast as possible. This is because, taking over a car loan is a complex way of getting a car and also very risky to do. Never agree to take over a car loan without meeting with the lender to make it official else you may be paying for a car loan you don’t have ownership of.