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

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Published on March 05, 2024 | 4 min read

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Key takeaways

You could refinance a car into someone else’s name, but it’s not the simplest way to remove yourself from the loan.
Selling your vehicle through a dealership or private sale is often the easiest way to transfer the car to someone else.
Refinancing a loan on your own or requesting a loan modification can help you save money if you want to keep the car.

If you can’t afford your vehicle payments, you may want to remove yourself from the loan and have someone else take responsibility. Doing this by refinancing the vehicle with a new owner instead of yourself isn’t a straightforward process. Instead, consider other routes to get rid of the vehicle.

How to refinance a car in someone else’s name

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. Note that your lender will still require you to pay the current loan balance off in full before transferring the title.

Refinance the vehicle twice

If you are set on refinancing the vehicle into someone else’s name, you will have to follow two steps.

Refinance with a co-borrower. Apply for a refinance loan with a co-borrower. A co-borrower is someone who shares equal responsibility for repaying the loan and has partial ownership of the vehicle.
Await approval. After completing the application, the lender will evaluate you and your co-borrower’s finances, including income, credit score and current debt load. Keep in mind that lenders set specific refinancing requirements. If the loan is relatively new, the lender will likely not approve this step.
Refinance a second time. If approved, 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.

When you transfer the vehicle to someone else, your state’s department of motor vehicles might consider it a sales transaction. The person you transfer it to might have to pay sales taxes on the loan value of the vehicle. Contact your local department to learn more.

Bankrate tip

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. Some lenders may charge you an origination fee for processing your loan application. Plus, you may have to pay 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, trading in your car can be a good option. Seek a more affordable car that still meets your needs. Try to get preapproved for a rate that is the same or less than what you’re currently paying. If you manage those steps, you can get out of your current loan and drive away with a more affordable monthly cost.

Simply refinance on your own

Refinancing is wise if you want to keep your current vehicle while lowering your monthly payment.

After considering your current loan and what you can afford, apply for loan prequalification and shop around. Consider banks, credit unions and online lenders when you are ready to shop auto loan refinance rates.

The bottom line

It is not easy to refinance your vehicle into someone else’s name. Your first option is to refinance the auto loan twice to add the new owner to the loan and remove yourself. This process may take many months. Sometimes it’s impossible.

In these cases, the recipient may have to undergo the typical buying and financing process.

Or you can modify your loan if you want to hang onto the car.