Car loans are a common way of financing car purchases. We often pay the upfront cost of the car as a down payment and then the remaining amount as financed.
The financed car is usually locked from selling or transferring from one name to another. However, banks provide individuals the option to transfer the loan of the car to ensure that they will be able to sell the car that is financed.
In this article, we will discuss how to transfer a car loan in another person’s name, the process, the documents required, and much more.
Table of Contents
How to Transfer a Car Loan to Another Person?
Before applying for any car loan, you’ll have to check for a few details that confirm your eligibility for transferring the car loan. Here are some of the important things that you’ll have to confirm-
Loan Agreement
When you get a loan you are often asked to sign a loan agreement that will list out all the terms and conditions of the loan.
You’ll have to check whether there is a mention of transfer of the car loan or not. if there is a mention of the car loan, then you’ll have to read it carefully what are the conditions and terms mentioned there.
If you satisfy the criteria then you can proceed further. If there is no mention of anything related to loan transfer then you’ll have to contact your bank and ask them whether they can transfer the car loan or not.
Search for a Buyer
After Finding out about the agreement details, you’ll have to find a buyer who is also ready to accept the remaining loan. You can contact your local used car dealer and they will arrange a buyer for you.
Apart from this, you can also use online portals like Facebook Marketplace, and classified websites to find a buyer for your car.
Buyer’s Credit Score
After finding the car, you’ll have to check the buyer’s credit score and his/her credibility to take a loan. The credit score and income of the individual draw a picture for the bank to find out whether he/she is eligible for the loan or not.
Talk to Bank
Now that everything is checked and you are ready to transfer the car loan to another person, you’ll have to contact the bank where you’ve your car loan and ask them for a loan transfer process.
It is best if you can visit the bank branch to do that. Talk to the bank representative and ask them for details like the process, documents required, interest rate charged, any fees associated with the transfer, etc.
After that, you’ll have to deposit the application form along with the documents. After confirmation of the document submission, your request for the loan will be processed and you’ll be notified about the disbursal by the bank.
Transfer the Car Registration
After completing the loan disbursal process, simultaneously, you’ll have to begin the car transfer process as well. This will save time as well as make the entire process smooth.
You’ll have to transfer the car registration by visiting the local RTO office and depositing the document along with the application form for the transfer of the Registration Certificate of the car.
The Registration certificate is an ownership certificate that confirms the ownership of the car. You’ll have to transfer the ownership of the car to another person by applying for transfer of ownership in your local RTO.
Insurance Transfer
Insurance is a mandatory document that every car owner must have for his/her car. You can transfer the insurance of your car easily to the buyer of the car.
Contact the insurance company and let them know about you selling the car. The insurance company will provide you with the complete information and documentation process for the transfer.
Upon transfer of the insurance, you’ll be relieved of any liability for the car.
Documents Required for Transferring a Car Loan
The following are the documents required for the transferring the car loan to another person-
- A form requesting the transfer of the loan to their name
- ID proof- Aadhaar Card, PAN Card, Driving License, etc.
- Address proof- Aadhaar Card, PAN Card, Electricity bill, etc.
- Income proof- ITR Filings, PAN Card, etc.
FAQ
If your car loan agreement does not specify the loan transfer then you can contact your bank and ask them whether they can transfer the car loan from your name to another person interested in buying your car.
The loan disbursal process can take anywhere from 5 working days to 2 weeks depending on the documentation and application and bank to bank.
Yes, the loan provided by the bank as a car loan transfer is a used car loan, the buyer who is purchasing your car will get a used car loan.
It can take anywhere from 4 weeks to 6 weeks depending on RTO to RTO and how well you’ve arranged the document.
I’m Shiv Kumar, a graduate with a passion for finance, marketing, and technology. My journey into finance started with a desire to understand money management and investing.
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