How to Refinance a Car into a Different Name - Is it Really Possible?

It's important to know your options for vehicle ownership, financing, and insurance. Buying an automobile is a major investment, and many people require financing when making this type of purchase. Taking on an auto loan is a big decision, and it's important to meet the terms of any loan you take out. Situations can change, however, and sometimes people want to renegotiate their contract or change their financing. This includes wanting to transfer the financing agreement to a different person. The good news is, you have options for what to do in this situation, but directly refinancing your car loan under somebody else's name isn't really possible.

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If you're having difficulty making your auto loan payments, or if you feel you aren't using your vehicle enough to make the payments worthwhile, you can't just refinance the car into a friend's or family member's name. Other options are available to you, however. They include selling the vehicle or approaching your lender about refinancing with a co-borrower. Whether you think refinancing, securing a co-borrower, trading in your vehicle, or simply selling it is best, it's important to understand all your options. This article explains how to refinance a car into a different name by transferring car ownership.

If you have any questions about your personal circumstances and your options for what you can do with your car loan, fill out our form to find your best solution.

Can You Refinance a Car Under a Different Name?

While you have options for refinancing or transferring a vehicle's ownership, you can't directly refinance a car into a different name. There's an exception in cases when a person is just a cosigner and, therefore, not listed as an owner of the vehicle. It's typically not possible for somebody else to assume financial responsibility for your car without also assuming ownership of the vehicle. This is a legal matter. By law, a borrower or co-borrower listed on a loan agreement must own or co-own the vehicle.

How to Transfer a Car Loan to Somebody Else

In most cases, the only way to transfer a car loan to somebody else is to refinance the vehicle twice. While possible, it's important to remember that at the end of the process, the vehicle will have a new owner, and you'll no longer own the car. Depending on who the owner is — you might sell it to a family member, for example — you could secure insurance as an occasional driver of the vehicle, but you still wouldn't own it anymore. Follow the below steps to refinance a car into a different name:

1. Refinance the Vehicle with a Co-Borrower

You can apply for a loan with a co-borrower. This could be someone who ultimately plans to solely own the vehicle. Sign a loan agreement that gives them equal responsibility for the loan and makes them co-owner of the vehicle. You'll need to add the co-borrower as an owner of the vehicle.

2. Refinance the Loan a Second Time to Remove Yourself from the Loan

The original co-borrower can then apply for a second refinancing. With this agreement, you simply would not include your name in the contract to make the initial co-borrower the sole holder of the loan. This relieves you of ownership of the vehicle and the obligations of your loan agreement.

Downsides of Refinancing Your Vehicle Twice

Refinancing your vehicle twice as a means of transferring loan obligations is probably not your best option, and in some cases, it's not even possible. Requirements for refinancing, including legal requirements, vary according to the lender and your location. Businesses and financial institutions may also have different requirements as a matter of policy. For example, if your loan is relatively new, a lender may not approve your refinancing application. It's also wise to be mindful of how often and when you refinance a loan.

There's no legal limit on how many times you can refinance a car loan, but that doesn't mean that refinancing is free from penalties or downsides. Refinancing a loan twice in a short period can hurt your credit score, and having a poor credit score can negatively impact your ability to secure future loans, mortgages, and rental agreements. That's why meeting the initial obligation of any loan you sign is crucial. It's also important to remember that you'll have to pay loan origination and title transfer fees to refinance your vehicle into somebody else's name twice.

Alternatives to Refinancing a Car Loan into Somebody Else's Name

While refinancing your automobile loan into somebody else's name twice might be possible, it's probably not your best option. If you're concerned about your ability to make your car loan payments, you need the money for something else, or you just don't use your vehicle enough to justify the loan, it's helpful to know your options. Here are some other things you can do if you're looking to restructure or get out of your current car loan agreement:

Sell Your Car

If your vehicle loan payments are becoming a problem, selling the car is the simplest and most effective solution. This is an easier process than refinancing twice, and it doesn't carry the same danger of damaging your credit score. However, it's important to note that transferring vehicle ownership is more complicated when you have a loan you've yet to pay off than if you own the vehicle outright. Even so, it's still possible.

If you want to sell your car, but your loan is not yet paid off, you have a lien on the car. This means that whoever loaned you the money has a legal claim to the car until you've paid off the loan or transferred it to somebody else. With a loan still outstanding, the simplest way to sell your car is through a dealership. This can minimize negotiation and help with paperwork. You can still sell the car privately if you want, though you'll need to prepare to transfer the vehicle title yourself. In any case, you'll have to pay the existing car loan off before you can transfer ownership of the car to a dealer or individual.