Can you refinance a car into someone else’s name?

If you have found your vehicle payments are no longer manageable, you may feel inclined to remove yourself from the loan completely and instead have someone else take responsibility. But this is not a straightforward process and cannot be done by just refinancing the vehicle with a new owner instead of yourself. Instead, consider other routes to get rid of the vehicle.

How to transfer a car loan to someone else

In order to transfer a car loan to someone else, you also need to transfer the vehicle itself, which is legally considered selling the car. Here are two ways to transfer ownership to someone else.

Sell the vehicle

If you are looking to transfer vehicle ownership but have not yet paid off your loan, you have a lien on your vehicle. This means the lender holds a legal claim over the vehicle until it is paid off or transferred to someone else.

In this scenario, the easiest way to sell the vehicle is through a dealership, but you can still sell it privately. If you sell privately, prepare to transfer the vehicle title yourself.

Refinance the vehicle twice

If you are set on refinancing the vehicle into someone else’s name, you will have to follow two steps. First, refinance the vehicle with a co-borrower. Then, refinance again to remove yourself from the loan.

First, apply for the loan with the co-borrower and sign off with new equal responsibilities. Next, you will refinance the loan once again, but this time remove your name from the loan. Be aware that this may not work and is not a recommended approach.

Keep in mind that lenders set specific refinancing requirements. If the loan is relatively new, the lender will likely not approve this step.

Also note that while there’s no limit to the number of times you can refinance a car, doing it twice in quick succession can ding your credit score. You’ll also pay loan origination and title transfer fees.

Other ways to save on an auto loan

Here are more practical options if you want to save money on your current loan or get out of your current car.

Request a modification

To modify your car loan, you’ll need to talk to your existing lender. Typically, modification is presented as an option to benefit both the borrower and the lender. You will retain use of the vehicle, and the lender doesn’t have to pay to repossess the car.

Gather information about your current financial circumstances and be ready to make a case for why your loan should be changed. It’s not good enough to say that you need it adjusted. You’ll need to show that you can keep making payments once the changes are made.

Trade in your car

If your problem is based on affording your current loan payment and refinancing is not an option, trading in your car can be a good opinion. If you’re able to find a more affordable car that still meets your needs and you get preapproved for a rate that is the same or less than what you’re currently paying, you’ll be able to get out of your current loan and drive away with a more affordable monthly cost.

Simply refinance on your own

Refinancing on your own is wise if you intend to hold on to your current vehicle while lowering your monthly payment. 

After considering your current loan and what you can afford, it is wise to apply for loan prequalification and shop around for different options. Banks, credit unions and online lenders are all options for when you are ready to start rate shopping.

Next steps

It is not easy to refinance your vehicle into someone else’s name — and in some cases, it isn’t even possible. If you are interested in giving your vehicle and loan to someone else, they must undergo the typical buying and financing process. The other option is to refinance the auto loan twice to add the new owner to the loan and remove yourself. Or you can modify your loan if you want to hang onto the car.