can you change ownership of a car on finance

Steering Clear of Confusion: Can You Change Ownership of a Car on Finance?

So, you’ve got your dream car sitting pretty in the driveway, financed through a loan agreement. Maybe life’s thrown a curveball, and now you’re wondering if you can pass the keys onto someone else. It’s a common question, and the answer isn’t always straightforward. Let’s break it down and see what options are available when it comes to changing ownership of a financed car.

Understanding the Basics: Who Owns What?

First things first, remember that when you finance a car, you don’t technically own it outright until the loan is fully repaid. The finance company or lender holds a “lien” on the vehicle, meaning they have a legal claim to it until you fulfill your financial obligations.

This means simply selling or gifting the car isn’t as easy as handing over the keys and calling it a day. You need permission from the lender and there are specific steps involved.

Can You Sell a Financed Car?

Yes, you can usually sell a financed car, but the process requires careful navigation. Here’s what you need to know:

* Contact your lender: This is crucial! Let them know about your intention to sell. They will guide you on the necessary procedures and might even have specific paperwork for transferring ownership.
* Pay off the loan: Ideally, aim to pay off the entire remaining balance before selling. If that’s not possible, you may need to negotiate a “payoff quote” with your lender. This will tell you the exact amount needed to settle the loan at that point in time.
* Transfer ownership: Once the loan is settled, you can proceed with transferring the title to the new owner.

Selling for Less Than You Owe: What Happens?

If the sale price is less than your remaining loan balance, things get a bit trickier.

You’ll need to cover the difference (“negative equity”) yourself. This means paying the lender the remaining amount out of pocket before the title transfer can happen.

It’s always a good idea to discuss this scenario with your lender beforehand. They may be open to alternative solutions, such as refinancing the loan or allowing the buyer to assume responsibility for the remaining payments (with their approval, of course).

Gifting a Financed Car: Same Rules Apply

Gifting a car follows a similar process. Remember, even when gifting the car, you’re essentially selling it for zero dollars. So, you’ll still need to work with your lender to ensure the loan is settled or transferred to the recipient.

Trading In Your Financed Car: A Smoother Route?

Trading in a financed car can be a more streamlined option. Dealerships are often experienced in handling these transactions. They’ll assess the value of your car, apply it towards your outstanding loan balance, and potentially help you roll any remaining debt into a new financing agreement.

Key Takeaways:

* Always communicate with your lender before making any decisions about changing ownership.
* You generally need to pay off the entire loan balance or negotiate a solution with the lender if selling for less than you owe.
* Transferring ownership involves specific paperwork and legal steps, so consult with professionals like a notary public if needed.

Remember: The best course of action depends on your individual circumstances and the terms of your finance agreement. Don’t hesitate to contact your lender or seek advice from a financial advisor for personalized guidance.