Is it Possible to Transfer Your Financed Car to Another Person

When it comes to financing a car, there may come a time when you find yourself wondering if it's possible to transfer your financed car to another person. Whether you're looking to transfer the car to a family member, friend, or even selling it to someone else, the process can seem daunting. In this article, we will explore the ins and outs of transferring a financed car to another person and discuss the various factors involved. So, let's get started!

Understanding Car Financing

Before we delve into transferring a financed car, it's essential to have a basic understanding of car financing. When you finance a car, you enter into an agreement with a lending institution, such as a bank or a credit union, to borrow money to purchase the vehicle. The lender then holds a lien on the car until you have paid off the loan in full.

Can You Transfer a Financed Car?

The short answer is yes, it is possible to transfer a financed car to another person. However, the process can be complex, and there are several factors to consider before proceeding. Here are some crucial factors that you need to be aware of:

Check Your Loan Agreement

The first step in transferring a financed car is to review your loan agreement. The agreement will outline the terms and conditions of the loan and may contain specific provisions regarding transferring ownership. Some lenders may allow for the transfer of a financed car, while others may not. If your loan agreement prohibits the transfer of the car, you will need to explore alternative solutions.

Contact Your Lender

If your loan agreement allows for the transfer of a financed car, the next step is to contact your lender. Notify them of your intention to transfer the car and inquire about their specific requirements and procedures. Your lender will likely require both you (the current owner) and the new owner to fulfill certain obligations before approving the transfer.

Obtain the New Owner's Financing

In most cases, the new owner will need to secure their financing to assume the car loan. They will need to meet the lender's credit and income requirements before being approved for the loan. It's crucial for the new owner to understand the terms of the loan and be prepared to take on the financial responsibility.

Transfer of Ownership

Once the new owner has obtained their financing and met all the requirements set by the lender, the transfer of ownership can take place. This typically involves signing over the title and registration to the new owner. It's essential to follow all proper procedures dictated by your state's Department of Motor Vehicles (DMV) to ensure a smooth and legal transfer.

Pay Off the Loan

One common misconception when transferring a financed car is that the existing loan is automatically transferred to the new owner. However, this is not the case. The original loan is tied to the current owner, and it's their responsibility to pay off the loan in full before transferring ownership. This can be done by using the funds obtained from the new owner's financing or by paying off the remaining loan balance using other means.

Is it a Good Idea to Transfer a Financed Car?

While it's possible to transfer a financed car, it's essential to consider whether it's a good idea in your situation. Here are some factors to consider:

Financial Responsibility

Transferring a financed car means transferring the financial responsibility associated with it. If the new owner fails to meet their loan obligations, it can ultimately impact your credit score and financial stability. It's crucial to assess the reliability and financial capacity of the new owner before proceeding with the transfer.

Loan Payoff

Before transferring the car, you must ensure that the existing loan is paid off in full. If the new owner is unable to secure financing or encounters any issues, you may be stuck with the responsibility of paying off the loan yourself. Failing to do so can result in negative consequences, such as damage to your credit score and potential legal actions by the lender.


Instead of transferring the financed car, it may be worth exploring alternative options, such as selling the car and using the proceeds to pay off the loan. This eliminates the need for transferring ownership and ensures that the loan is settled entirely. Additionally, you may consider refinancing the car if the new owner wants to assume the loan directly. Discuss these options with your lender to determine the best course of action.

Frequently Asked Questions (FAQ)

Now, let's address some common questions about transferring a financed car to another person:

  • Q: Can I transfer a financed car if the new owner has bad credit? A: The new owner's creditworthiness is crucial in securing financing for the assumed car loan. If the new owner has bad credit, it may be challenging for them to obtain financing, which can complicate the transfer process.

  • Q: What documents are required for transferring a financed car? A: The specific documents required may vary depending on your state and lender. Generally, you will need the car's title, registration, loan agreement, and a bill of sale. Consult your state's DMV and your lender for the exact documentation needed.

  • Q: Can I transfer a leased car to someone else? A: Leased vehicles typically cannot be transferred to another person. Leases entail specific terms and conditions that prohibit the transfer of the lease agreement. It's best to consult your leasing company for guidance on transferring a leased car.

  • Q: Are there any fees associated with transferring a financed car? A: There may be fees involved when transferring a financed car, such as transfer of title fees, registration fees, and document processing fees. These fees vary by state and may also be subject to the lender's policies.

  • Q: Can I transfer a financed car to a family member or friend? A: Yes, it's possible to transfer a financed car to a family member or friend. However, the same considerations apply, such as checking your loan agreement, meeting the lender's requirements, and ensuring the loan is paid off in full before the transfer takes place.


Transferring a financed car to another person is indeed possible, but it's a process that requires careful consideration and adherence to various requirements. Before proceeding with the transfer, review your loan agreement, contact your lender, and assess the financial responsibility involved. Remember to pay off the loan in full and follow all necessary procedures to ensure a legal and smooth transfer. If you're unsure about the process or encounter any challenges, it's best to consult with your lender or seek professional guidance.

22 October 2023
Written by John Roche