Do you want to sell your car while your auto loan is still active? Although difficult, it is not impossible. The most preferred option is to close your loan account by settling the loan first and then selling the car. So, how to transfer car loan to another person easily and ethically? If you cannot repay the loan, you have the right to transfer the loan to the next person.
Before you can transfer car loan to someone else, you must also transfer ownership of the vehicle to them. Banks may let you take the burden of your car loan off your hands by giving it to someone else, as long as you meet their requirements.
Related: How to Check Car Insurance Online
What is car loan transfer?
Many people take car loans to purchase four-wheelers, but with time, the loan obligations may become difficult and it may become difficult for the car owner to pay the loan installments. The only way out is to sell the car and transfer the loan balance. However, transferring the car loan to a new buyer may not be that easy. If you meet the conditions, the bank may allow you to transfer your loan to another borrower.
You can use an auto loan transfer to transfer the balance of your existing auto loan from one financial institution to another. This is often done to get a lower interest rate, better loan terms, or better customer service from the new lender. The new lender will pay off your existing loan and issue you a new loan with modified terms. This will lower your interest rate and allow them to manage your loan more efficiently after you transfer car loan.
How to Transfer Car Loan to Another Person or Party
Regardless of the reason for selling the car, you can transfer car loan using the process mentioned below:
Check your loan agreement:
Loan Documents you will clearly state. It is possible to transfer your loan to someone else. If you can’t find this information, you can contact your bank and ask for clarification on transfer options and processes. If your bank has specifically mentioned that the loan is non-transferable, transferring it will be extremely difficult.
Find a suitable new borrower:
You will need to find someone willing to take the loan and take ownership of your car. Unless you make a good offer, people will usually not be interested in taking out a medium-term loan. Research used car prices and do the math to estimate a good price to sell your car. Selling your loan with the car will lower the car’s price. But it depends on the loan amount that the new owner is still responsible for.
Check the borrower’s creditworthiness:
The person taking over your loan must have equal or higher creditworthiness than you. He must have a steady source of income and a good credit score, depicting a clear repayment history of any previous loans or credit card debt. The new borrower will need to submit relevant documents to the lender.
Check the car dealer:
If you cannot find a suitable buyer to transfer car loan to, you can contact the car dealer. These dealerships have contacts regarding used car purchases, and it may be easier to find a buyer through a car dealership.
Transfer of vehicle registration:
Transfer of loan application is not the only concern in this process. You will also need to transfer your vehicle registration. To do this, you need to go to the nearest Regional Transport Office (RTO). This request may take up to two weeks to process. Authorities will have to conduct a background check with the bank before changing the name on the registration certificate. Fees may apply for this.
Insurance Requirements:
New borrowers also need to meet insurance requirements. You will also need to check with your auto insurance provider to get approval to transfer your insurance policy. Send the bank documents to the insurance company and they will make the changes. This will ensure that you do not have to pay premiums for an insurance policy that you do not use. The new owner of the car will have to bear the cost of car insurance.
Document Submission:
New borrowers will be required to submit the following documents. The bank may request these additional documents if necessary:
- Loan transfer request form in their name
- Proof of identity
- Proof of address
- Proof of income fees: Banks may charge processing and transfer fees when changing borrowers.
Depending on the loan term and remaining principal, the fee will vary. You should check with your lender to find out what fees are involved in the transfer process.
Manage the Insurance Coverage
Inform your car insurance company to transfer car loan policy to the new borrower’s name and account. Submit the needed documents as well to highlight the changes.
Charges
Banks may charge fees and transfer charges for switching borrowers. The fees vary depending on the remaining loan tenure and principal amount. You should inquire with your lender about any fees associated with the transfer process.
Can I prepay or terminate my car loan?
Yes, it is possible to reimburse or terminate your car loan. However, in case of foreclosure, the bank charges certain fees. In case of loan foreclosure, the following documents need to be submitted:
- Prepayment statement and Bank statement showing that the last installment has been paid
- Copy of RC
- Payment should be made through direct debit, cheque, or cash.
- Application form signed by the applicant
- PAN card
- Insurance copy of the vehicle
Transferring Car Loan: Tips
- First, seek approval from your bank to transfer the loan before embarking on the loan transfer process.
- Find the right buyer or check with car dealers.
- Check with the RTO and insurer only after receiving approval from your lender so that the transfer can take place.
- Ensure vehicle ownership has been transferred.
- Ensure insurance contracts are transferred.
- If the vehicle is damaged during the transfer process, you will be responsible.
- Be sure to keep the vehicle protected and secure until the move is complete.
Can a car loan be repaid early or confiscated?
Yes, it is possible to prepay or foreclose on an auto loan. However, the bank will charge a fee in the event of foreclosure. The documents mentioned below must be produced for loan seizure: Advance payment statement Bank statement showing that the previous instalment has been paid Copy of RC Method payment must be made by DD, check or cash Request letter signed by the applicant PAN card Insurance copy of the vehicle
Conclusion
If you want to transfer car loan, you also need to consider the age of the vehicle and the loan term. Normally, the car loan repayment term can be up to 7 years. As a car loan borrower, if you are finding it difficult to get a loan, you can opt for the car loan balance transfer facility. Transferring the balance from your auto loan will help you get a loan with a lower interest rate.
Benefit from refinancing your vehicle with a car loan from CarYanams.
Read Also: