What is the process to transfer a used car loan to another borrower?

Transferring a used car loan is a complicated process that requires coordination on behalf of both parties involved and the lender. If you are considering this process, you need to fully understand it in order to protect both parties from potential disputes going forward.

The first step is for the existing borrower and prospective new borrower to agree to the transfer of the loan. Once there is an agreement, notice of the transfer will need to be provided in writing to the lender. The lender will state their requirements as well as eligibility for the new borrower.

The new borrower needs to provide the documentation requested which usually includes:

• proof of identity,
• proof of income,
• proof of address,
• proof of residence,
• other information requested by the lender.

The lender will need to evaluate the new borrower's credit rating, employment position and capacity to repay. The lender will usually also request an updated valuation of the car to confirm that the current value of the car is within their lending policy based on the car's current worth.

After the transfer, the new borrower is liable for any further loan repayment obligations under the loan agreement. You should also update the vehicle registration and insurance documents to accurately reflect the new ownership and loan liabilities. Both parties should carefully read the terms of the transfer and ensure the documentation is completed accurately.