Car Loan Transfer: Everything You Should Know

A car loan transfer comes in handy when you want to sell your car or want to transfer your car loan to a different lender. Transferring your car loan offers relief and flexibility, allowing you to manage finances more effectively. Read on to know how to transfer a car loan, things to consider before transferring, and more!

How to Transfer a Car Loan to Another Person?

Here’s how to transfer a car loan:

• Review Loan Agreement: Check your loan documents and confirm if there is an option for a loan transfer.


• Find a Suitable Buyer: Look for a borrower who is willing to take on the car loan along with the ownership. Also, check if they have a good credit score and a stable source of income.


• Get Your Lender's Approval: The lender will assess the buyer's credit history and based on that, he may approve or reject the transfer.


• Look for a Car Dealer: If you are unable to find a suitable borrower, you may check with a car dealership. Car dealers have several connections with potential buyers, making the transfer process easier for you.


• Transfer the Registration of the Vehicle: Once you get a suitable borrower, transfer the car's registration to the new owner by visiting the Regional Transport Office (RTO).


• Update Insurance: Inform your insurance company about the transfer and update the policy to reflect the new owner.


• Submit Necessary Documents: Provide documents such as ID proof, loan transfer request form, proof of income, address proof, etc. to complete the process.


• Fees and Charges: Talk with your lender to confirm the car loan balance transfer charges that you need to pay.

ALSO READ :- Why You Should Go for Used Car Loan Balance Transfer?

Reasons for Transferring Your Car Loan to Another Person

Here’s why transferring your car loan balance may be beneficial:

1. Financial Hardship
Unforeseen financial challenges such as unexpected job loss, medical expenses, etc. may make it difficult for you to keep up with your car loan payments.

2. Relocation
If you are relocating to a new place where your vehicle is no longer useful or required, selling your car and opting for a car loan transfer can be a practical and convenient option.

3. Divorce or Separation
In situations where two or more people jointly own a vehicle and one of them wants to transfer the loan to the other, it can simplify the division of assets in case of a separation or a dispute. The feature ensures that one party takes over the responsibility of making payments towards the outstanding balance, while the other party is released from this obligation.

4. Lower Processing Charges
When you avail the feature of a car loan balance transfer from a leading financial institution, it offers you a cost-effective way to avoid processing fees that are generally associated with refinancing a loan.

5. Flexible Repayment Terms
Availing a car loan transfer from one of the top NBFCs can provide you with greater flexibility in managing your repayments.

ALSO READ :- How to Improve CIBIL Score to Get a Loan at Lower Interest Rates?

Things to Consider Before Transferring Your Car Loan

Before initiating a car loan transfer, consider the following:

• Impact on Credit Score - Transferring a car loan can impact your credit score. Since you are closing an existing credit account prematurely, the lending institution will report this to the credit bureaus. Thus, it is essential to weigh this against the benefits of transferring the loan.
• Lender's Approval - The lender will evaluate the creditworthiness of the new borrower to determine whether they are eligible to assume the loan. A good credit history is typically required.
• Financial Responsibility - Even after transferring the loan, you might still be held financially responsible if the new borrower defaults on payments. It is essential to have a clear agreement in place to avoid any future complications.

Alternatives to Loan Transfer

If transferring your car loan does not align with your circumstances, consider the following alternatives:

• Refinancing - Refinancing your car loan with better terms or lower interest rates can make the monthly payments more manageable.
• Selling the Car - Selling your vehicle and using the proceeds to pay off the loan allows you to start fresh with a new financial arrangement.

To Conclude

Car loan transfer offers a solution if you are facing financial hardship or other significant challenges. It allows you to transfer your existing loan obligations to a new borrower thereby providing flexibility in repayment, enabling potential cost savings through better loan terms. However, before opting for this feature, you must carefully consider factors such as credit score impacts and the lender’s approval to make a more informed decision.

Disclaimer

We take utmost care to provide information based on internal data and reliable sources. However, this article and associated web pages provide generic information for reference purposes only. Readers must make an informed decision by reviewing the products offered and the terms and conditions. Pre-Owned Car Loan disbursal is at the sole discretion of Poonawalla Fincorp.
*Terms and Conditions apply