How to Take Over Car Payments

Although you can take over car payments for someone else, the process can be complicated and fraught with risk. If you want to take over car payments on a used car, the current owner must contact their lender. The lender must approve of your financial ability to take over payments before any transfers can occur. 

Fraud is an inherent risk in assuming car payments on behalf of another. Many online scams dupe victims into parting with their funds before seeing the car—if such a car even exists. The fact is that until the seller signs over the title to you, they own the vehicle on paper. Any verbal agreements can be nearly impossible to enforce. 

One of the advantages of buying a used car is that you can choose from several models and various lenders to find the best deals and rates. Below are the steps to take over a car loan when buying a used car. 

1. Choose loan assumption or refinancing 

The original lender dictates whether you can assume the loan as it stands or if you must refinance the loan to incorporate your financial standings. The loan terms stay the same with a loan assumption but change if you refinance. Most financial institutions require you to refinance, especially if the loan is several years old. 

2. Evaluate the vehicle and current loan terms

Review the vehicle you want to take over payments for, similar to the inspection process you would perform on a used vehicle you bought at a dealership. Look at any service records and request the vehicle history report to identify any red flags early on. If the car is upside down on the loan, consider the amount necessary to bring it above water and if that’s feasible with your current financial situation. 

3. Contact the lender directly 

Speaking with the lender allows you to verify the vehicle’s information and uncover any additional details about the loan contract that could sway your decision. Some lenders refuse to transfer the original loan, while others may make exceptions. Now’s also an excellent time to discuss the transfer process and any associated fees. 

4. Apply for your own auto loan 

If you have to refinance the car loan, submit the appropriate application and any requested documents. These documents may include your most recent pay stubs, proof of address, driver’s license, and authorization to perform a credit check. This process can take up to a week or more. 

5. Transfer the title and registration

If your loan application is approved, you can begin the transfer process. As the new owner, you must register the car at your local Department of Motor Vehicles (DMV) with a bill of sale. Changes in ownership will be reflected in the car’s title. The new loan supersedes any existing loan terms. 

6. Consider the alternatives

If your application was denied, you do have alternative options. You can arrange with the seller to pay off the remaining balance and void the need for a lender altogether. However, ensure you get everything in writing if that’s your chosen path. You can also look into lease assumptions if you’re not ready to buy anything.

As you look into car loans, you may ask yourself several questions. For example, you might wonder if you can get a car loan without a job or how to calculate APR on a car loan. Below are questions you should ask before you take over a car loan so you know what you’re getting into. 

Is the car loan assumable? 

Before looking too much further into assuming a car loan, ensure it’s worth your time. Call the lender and speak to them directly for an accurate answer. If the loan agreement forbids the transfer of financial responsibility, any subsequent questions are a waste of breath. 

Why does the current borrower want to transfer the loan? 

Most borrowers transfer their car loans to get out of debt and shift financial responsibility to someone else. However, it never hurts to ask for more details if you’re curious or think something might be fishy. If your gut tells you the seller may be hiding something, do your due diligence before moving forward.

What are the loan terms, and can they be changed?

The lender may not be willing to reveal the current car loan terms, but requesting a copy from the seller can help you understand what you’re getting into. Look for the interest rate, outstanding balance, additional fees, and loan term. Speak with the lender to see what terms you can expect should you assume payments. 

Is the loan in good standing?

A single discussion with the lender can also clear up the loan status. If the borrower defaulted on payments and the car is scheduled to be repossessed, that’s a situation you may want to steer clear of. If the loan is in good standing, that can further instill confidence that nothing shady is happening. 

What steps are required to transfer the car loan? 

If the lender agrees to transfer car payments to you, the process can be rather involved. You may need to submit an application proving your financial ability. The lender may also charge administrative fees to draw up a new agreement or require that any outstanding fees in the original contract be fulfilled first.  

Taking over car payments can be tricky, especially if you’re unfamiliar with how it all works. The good news is that you have several options, including the following. 

Subscribe

Car subscriptions combine the best perks of many alternatives to taking over car payments. For instance, a FINN car subscription unlocks the entire fleet, from pickups and SUVs to premium sedans and electric vehicles. A single monthly fee includes registration, insurance, depreciation, and maintenance, so you can focus on the bigger picture and stress less about the minor details. 

Pros:

• Flexible terms to fit your lifestyle
• You choose the exact car you want to subscribe to 
• Convenient transportation solution 
• Inclusive monthly payment 
• Benefits of an extended test drive

Cons:

• Lack of ownership once subscription terms end
• Limited customization
• Mileage limits  

Rent

Car rentals can keep you on the road as you consider other ways to get behind the wheel of your own car. Most rentals are kept clean and well-maintained and don’t require a credit check or down payment. Competition among rental companies can also work in your favor to obtain affordable, competitive daily, weekly, or monthly rates. 

Pros:

• No need to register or insure the car
• Short-term commitment
• Flexibility to choose vehicles you want to drive 
• No credit check

Cons:

• Expensive 
• Limited variety depending on the car rental agency 
• Lack of ownership or modification

Lease

Sometimes, approaching car ownership can require thinking in segments of a few years at a time. For those times, leasing can help you drive the latest models and decide what you want in a vehicle. Many dealerships also offer lease deals to sweeten the pot. 

Pros:

• Drive the newest models with the latest technology
• Maintenance is often covered by a warranty 
• Test-drive a car before you make a financial commitment

Cons:

• Mileage and customization limitations
• High potential for lease return fees
• Lack of ownership  

Buy

Purchasing a car outright or financing the deal can help you build equity in a car you can do practically anything you want to (within reason). Many people buy a car to trade it in for a more expensive vehicle in the future or just pay it off to turn that car payment into a monthly savings contribution. 

Pros:

• Do what you please with the car 
• Lower overall cost of vehicle 
• Build equity in the vehicle

Cons:

• Maintenance costs can quickly drain savings
• Resale value declines due to depreciation
• Years-long financial commitment