How to Take Over Car Loan Payments

If you would like to take over payments on an auto loan, you should consider whether you are also taking over ownership of the car. These two items are handled separately. You will have to go through one process to gain ownership of the loan and another process to gain ownership of the car. Ensure you do both to prevent losing the asset you are making payments for.

Taking Over an Auto Loan

You will have to primary options to take over an auto loan. The first is to modify the loan directly with the lender, and the second is to take out a wholly new loan for the asset to pay off the existing debt. The decision will depend on your credit situation and the desires of the current debt holder.

  • Taking over an existing loan is easiest if your credit is as good as the existing debtor. The person listed on the loan will have to contact the lender and ask for the modification. You will then submit your application to be approved for the loan take over. Terms may change with the modification. This is also the best option if the current debtor is worried about a credit score drop.
  • If your credit is worse than the existing debtor, then you may have to seek a separate loan. The current lender may not approve you, and it is even possible you will need a high risk auto loan. You can then use this loan to pay off the existing. This option will hurt the current debtor's credit more.

Taking Over a Car Title

Just because you pay a loan off does not mean you legally own the title to a car. A car's title is the official record of ownership handled through the state's Department of Motor Vehicles. A loan is simply the record of debt on file with a private lender. In order to change a title, the previous owner will have to sign over a title to you. This can be done two ways.

  • If your state issues titles with a spot to list the sale of the vehicle on the back, then you can use this area to make sure the title is signed over to you. If so, you can avoid the bill of sale process in the next option.
  • Secure a bill of sale from the DMV. List the purchase price and the new owner of the vehicle. If you are simply taking over the car as a gift, the purchase price listed can be $0.

Once the sale is handled, both parties must sign the title to have the car officially handed over to the new owner. In some states, you will have to do this part in front of a notary. Make sure to follow these steps as the new owner. If not, the previous owners can claim a legal right to the vehicle despite the fact you took over the loan and made payments for months or even years.


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