You usually cannot transfer a car loan directly to another person
Most car loans are tied to both the vehicle and the borrower's credit. The lender has approved you specifically — your income, credit history, and ability to repay. Transferring the loan to someone else means the lender loses that security. For this reason, nearly all auto lenders do not allow loan transfers between people.
What you can do instead depends on your situation. You can sell the car and pay off the loan with the sale proceeds. You can refinance the loan in someone else's name (though they will need to meet the lender's requirements). Or you can keep the loan in your name while someone else makes the payments — though this carries real risk for you.
The cleanest option is usually to pay off the loan first, then transfer ownership of the car. This takes the lender out of the picture entirely.
Key Takeaways
- Car loans are not transferable between people because lenders approve based on the borrower's credit and income, not just the vehicle.
- Selling the car and using the sale price to pay off the loan is the most straightforward way to move the vehicle to someone else.
- Refinancing the loan in another person's name is possible if they meet the lender's credit and income requirements, but they will be the new borrower.
- Letting someone else make payments on a loan in your name leaves you legally responsible if they stop paying.
- If the car is worth less than what you owe, you will need to cover the difference out of pocket before transferring it.
Selling the car and paying off the loan
This is the cleanest path. You sell the car to the other person (or anyone else), use the sale price to pay off the remaining loan balance with your lender, and then transfer the title once the loan is satisfied.
Contact your lender and ask for a payoff quote. This is the exact amount needed to close the loan on a specific date — it includes interest accrued up to that day. The quote is usually good for 10 to 15 days. Ask the lender whether they can accept payment directly from a buyer or whether you need to pay it yourself first.
Some lenders allow the buyer to wire funds directly to them at closing. Others require you to pay the loan off, then transfer the title. If you are selling to someone you know, you can arrange the timing so the funds clear before the title transfer. If you are selling to a stranger, your state's DMV or a title company can handle the coordination — the lender releases the lien once payment clears, and the new owner gets a clean title.
If you owe more than the car is worth (called being "underwater" on the loan), you will need to bring cash to closing to cover the difference. The lender will not release the title until the full loan balance is paid.
Refinancing the loan in someone else's name
A refinance replaces your existing loan with a new one. The new loan can be in another person's name, making them the borrower and you the former owner. This works only if that person meets the lender's requirements — sufficient income, acceptable credit score, and a willingness to take on the debt.
The person who will take over the loan should contact your current lender or shop for a new lender. They will need to provide income verification, employment history, and consent to a credit check. The new lender will evaluate them the same way they would any car loan applicant. If approved, the new loan pays off your old one, and the new borrower becomes solely responsible for the remaining payments.
This approach works well when the other person has good credit and stable income. It does not work if they cannot meet lending standards. Also note that refinancing may come with new terms — a different interest rate, different monthly payment, or different loan length — depending on the new lender and the borrower's creditworthiness.
Keeping the loan in your name while someone else pays
You can allow another person to make the monthly payments on a loan that remains in your name. This is informal and carries significant risk for you. If the other person stops paying, the default appears on your credit report, not theirs. The lender will pursue you for the debt. You remain legally responsible for the full balance.
This arrangement works only if you trust the other person completely and have a written agreement about what happens if they cannot pay. Even then, you have no legal recourse against them if they default — the lender's claim is against you. Some people use this approach temporarily (for example, while a family member rebuilds credit before refinancing), but it should not be a permanent solution.
If you go this route, make sure the person making payments knows the due date, the payment amount, and the account number. Ask your lender whether they will accept payments from someone other than the account holder — most will, but some require the borrower to make payments directly.
What happens to the title and registration
The car's title and registration are separate from the loan. You can transfer the title to the new owner even while a loan is still active — the lender's lien will appear on the title. However, most states do not allow a title transfer until the loan is paid off or refinanced.
Check your state's DMV website for the specific process. Generally, you will need the current title, a bill of sale signed by both parties, proof of insurance for the new owner, and either proof that the loan is paid off or a lender's authorization letter if the new owner is refinancing. Some states allow the transaction to happen at the DMV; others require a title company or notary to handle it.
If the car has a loan on it and you try to sell it without paying off that loan first, the buyer will not get a clean title. Most buyers will not accept this, and most states will not process the transfer. This is why paying off the loan or refinancing it in the new owner's name must happen before or at the same time as the title transfer.
When the car is worth less than the loan balance
If you owe $15,000 on a car worth $12,000, you are underwater. Selling the car to transfer it to someone else means you will need to pay the $3,000 difference out of pocket to satisfy the lender.
You have a few options. You can pay the difference yourself at the time of sale. You can refinance the loan for a longer term to lower the monthly payment, then sell later when you have built more equity. Or you can keep the car and continue paying until the loan balance drops below the car's value.
Refinancing in someone else's name does not solve this problem — the new borrower would still owe more than the car is worth. Most lenders will not refinance an underwater loan for a new borrower, because the lender's security (the car) is worth less than the debt. Your best option in this situation is usually to pay down the loan yourself until you have equity, then transfer the vehicle.
Frequently Asked Questions
Can I just give someone the car and let them take over the loan payments?
You can let them make the payments, but the loan stays in your name and you remain legally responsible. If they stop paying, the default hits your credit and the lender pursues you. The lender does not have to accept a payment arrangement with someone other than the borrower. This is risky and should only be temporary.
What if the other person does not have good enough credit to refinance?
If they cannot meet the lender's requirements, refinancing is not an option. Your choices are to pay off the loan yourself and then transfer the car, or to keep the loan in your name while they make payments (which carries risk for you). A co-signer might help them refinance, but that person would also be responsible for the debt.
Do I need to tell my lender I am selling the car?
Yes. Contact your lender before the sale and ask for a payoff quote. Tell them who will be buying the car and whether the new owner will refinance or whether you will pay off the loan. The lender needs to know so they can coordinate the lien release and title transfer. Some lenders have specific procedures for this.
How long does it take to transfer a car loan to someone else?
If you are paying off the loan and transferring the title, the process usually takes one to two weeks. The lender needs a few days to process the payoff, and the DMV needs a few days to process the title transfer. Refinancing in someone else's name can take one to three weeks, depending on how quickly the new lender approves and funds the loan.
What if I want to transfer the car but keep making the payments?
You can transfer the title to the other person while keeping the loan in your name, but this is unusual and risky. You would still be the borrower and legally responsible for the debt. The new owner would own the car but have no obligation to pay for it. Most lenders do not recommend this arrangement.