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How to transfer a car loan to another person

Learn what steps you need to take to transfer a car loan to another person.

You can transfer a car loan to another person quickly and easily when you follow the right steps. Just be aware that you’ll need to find a buyer who is willing to take on your old loan, which can take time and effort. Keep reading to find out how to transfer an auto loan, and learn when you might want to find other alternatives.

Can you transfer a car loan to another person in Canada?

You may want to transfer a car loan to another person if you can no longer make your repayments or you want to buy a less expensive car. Just be aware that you could lose money on the sale when you transfer a car loan if you have positive equity in your vehicle. You’ll save money or break even if you have negative equity in your vehicle.

What is positive vs negative equity?

  • Positive equity. Having positive equity means that your car is worth more than what you owe. For example, if your car is worth $10,000 and you owe $3,000, you have a positive equity of $7,000. If you have positive equity in your vehicle, you may want to refinance your loan to lower your payments or sell your car to pay off your loan (and pocket whatever money is left over).
  • Negative equity. Having negative equity means that you owe more than what your car is worth. For example, if you owe $18,000 on your loan but your vehicle has depreciated to $15,000, you have a negative equity of $3,000. If there is negative equity in your vehicle, it’s in your best interest to transfer your car loan to another person.

Step-by-step process to transfer a car loan to another person

You can transfer a car loan to anyone who is willing to take over your payments by following these steps:

1. Contact your dealer or lender.

Contact your lender to find out if you’re allowed to transfer your car loan to another person, and what steps you need to take. They should also be able to give you an idea of what paperwork you have to fill out.

2. Check restrictions to transfer a car loan.

Ask your lender about restrictions to transfer a car loan to another person. You may have issues transferring your loan if you’ve missed payments, or if the person you want to transfer to has bad credit or doesn’t meet other eligibility requirements.

3. Put together the necessary documents.

You’ll want to fill out your end of the paperwork in advance so that you can guide your buyer through the loan transfer process. The new buyer will likely need to visit your lender in person so that your lender can witness signatures and set up direct deposit.

4. Line up your buyer.

Line up a buyer to transfer your car loan to. Most vehicle transfers happen between friends or family members, but you can also advertise your vehicle on a public marketplace like Kijiji, Craigslist or Facebook Marketplace to find the right candidate.

5. Set up meetings with potential buyers.

Once you’ve got an interested buyer, you should show them the vehicle and explain how to transfer an auto loan. You’ll also want to check that they have a good credit score and proof of income to show that they can make the payments.

6. Confirm the loan transfer.

Go into your lender or dealership with your prospective buyer to complete the transfer. Be sure to double check that your loan has transferred successfully before you allow the new buyer to drive away. This will make sure you’re not held liable for payments or damage to the car in the future.

7. Modify the title of the vehicle.

When you transfer a car loan to another person, you should also make sure to transfer the ownership of the vehicle. You can do this by going into your local insurance agency to get the car registered and insured under the new owner’s name.

Looking for a car loan? Compare your options here

Name Product Loan Amount Interest Rate Loan Term Min. Credit Score Requirements Table description
Loans Canada Car Loans
$500 - $35,000
0% - 29.99%
3 - 96 months
300
Min. income of $1,800 /month, 3+ months employed
Compare rates from multiple lenders.
Complete a single application to get quotes from different lenders. Bad credit, CERB and EI borrowers considered.
goPeer Car Loan
$1,000 - $25,000
8.00% - 31.00%
36 - 60 months
600
Min. income of $40,000 /year
P2P platform with competitive rates.
Canada's first regulated consumer peer-to-peer lending platform that connects creditworthy Canadians looking for a loan with Canadians looking to invest.
AutoLoanProviders
$7,500 - $85,000
3.99% - 29.99%
12 - 96 months
300
Min. income of $1,800 /month, 1+ months employed
Available in Ontario only.
Apply online and get your new vehicle delivered to your door anywhere in Ontario free of charge. All credit scores considered.
CarsFast Car Loans
$500 - $75,000
4.90% - 29.90%
12 - 96 months
300
Min. income of $1,800 /month, 3+ months employed
Get a new or used vehicle delivered to your door.
Browse thousands of vehicles from dealers across Canada and get matched with financing that meets your needs.
Coast Capital Car Loan
$10,000 - No Max.
Varies
18 - 84 months
650
Able to service debt payment of $300/month
Competitive rates and flexible terms.
Finance new and used vehicles from one of Canada's largest credit unions. No credit union membership required. Available across Canada except SK, QC, NT, NU, YT.
Splash Auto Finance
$10,000 - $50,000
9.90% - 29.90%
24 - 84 months
300
Min. income of $2,200 /month, 3+ months employed
Apply with any credit score.
Get financing for a new or used car. Auto loans for borrowers with fair credit, bad credit, no credit or bankruptcy.
LoanConnect Car Loans
$500 - $50,000
9.90% - 46.96%
3 - 120 months
550
No min. income requirement
Pre-approval in as little as 60 seconds.
Get access to 25+ lenders through this brokerage. Get your funds in as little as 24 hours.
Canada Auto Finance
$500 - $45,000
4.90% - 29.95%
3 - 96 months
300
Min. income of $1,500 /month, 3+ months employed
Get financing from partnered local lenders.
Financing for a new or used car is available for borrowers with bad credit, no credit, CERB, EI or bankruptcy.
Carloans411 Car Loans
$500 - $50,000
1.90% - 19.99%
Up to 72 months
300
Min. income of $1,600 /month, 3+ months employed
High application approval rate.
Get connected with suitable lenders to finance your next car, van or truck. Check eligibility for this loan through LoanConnect.
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Benefits of transferring a car loan to another person

There are a handful of benefits when you transfer a car loan to another person:

  • No more payments. This is the biggest benefit since the reason why most people transfer a car loan to another person in the first place is to get rid of their payments.
  • Less impact on your credit score. If you find someone to take over your loan, you won’t need to worry about defaulting on your payments and ruining your credit score.
  • You can purchase a new vehicle. Once you get rid of your old loan, you’ll be better placed to purchase a less expensive vehicle.
  • Save money. Once you transfer a car loan to another person, you can choose to go without a vehicle to save money on all of the costs of car ownership.

What to watch out for

Transferring a car loan to another person comes with its fair share of drawbacks as well. These include the following:

  • Difficult to find qualified buyers. It can be difficult to find a buyer with a solid credit score who’s willing to take over your loan payments.
  • Restrictions on certain transfers. Your lender can refuse to transfer a car loan – which means you’ll need to explore other options to get rid of your loan.
  • You’ll lose any positive equity in the vehicle. You’ll lose any money you put into your loan if you transfer it several years into your payments.
  • Transfer fees. You’ll likely need to pay a fee to transfer a car loan to another person in order to cover administrative costs for your lender.

Alternatives to transferring a car loan to another person

You may want to consider these options if you don’t want to transfer a car loan:

  1. Refinance your car loan. If you’re struggling to make your payments and your credit score is in good shape, you might like to consider refinancing your car loan. This would allow you to spread your payments out over a longer term and potentially even qualify for better interest rates.
  2. Sell the vehicle to pay off your loan. If you have a decent amount of positive equity accrued in your vehicle, you may be able to sell it to pay off your loan.This would let you pay off your loan and put whatever money is left over from the sale into savings. Find out how to sell a car with a loan on it.
  3. Trade your vehicle in for a more affordable car. Another safe bet would be to trade your vehicle in for something more affordable. Let’s say your vehicle is worth $20,000 with $5,000 left on it. If you trade it in for a $10,000 vehicle, your dealership may be willing to wipe out your debt.

Bottom line

You can easily transfer a car loan to another person if this makes sense for you. Follow our step-by-step guide for how to transfer an auto loan, and learn when this might be the best option for your personal situation.

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