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So you have taken out a car loan but now find yourself in a situation where you do not really wish to go through with the agreement anymore. You know of somebody who may be interested in taking on the loan instead and you’re wondering if this is possible.
Is it Possible to Transfer Car Loans?
It is important to understand that a car loan is different from a car finance. This is what you get from the actual dealers which details the agreement involved in the vehicle purchase. Most of the time, this would include you making a down payment and then making monthly instalments. The car will finally be yours the moment that you have successfully paid it off.
A car loan, meanwhile, is more like a personal loan. This means that you’re borrowing money from a lending institution based on your credit history and credit score, as well as on the amount of income that you are earning. It could be secured or unsecured. If secured, it will usually mean that the vehicle you’re buying is used as collateral.
If you’re wondering whether it is possible to transfer your car loan to somebody else, the plain answer is no. It is a personal loan, after all. Personal loans are approved by lenders based on your circumstances as a borrower. It is based on hard credit checks as well as the details contained in your credit history. These are requirements that could not be transferred to another person. Which is why a car loan is non-transferrable.
What You Need To Know About Car Loans
Also, if another person wants to get a car loan, then he will have to meet the necessary eligibility requirements and should qualify through his own means. What you can do is first pay off the loan and then sell the car if you no longer need it to recoup the costs. Just remember that you cannot sell the car while there is still a loan attached to it.
When you have taken out a loan, it can be a struggle to keep up with the payments. If your loan repayments are just around the corner and you need some way to breathe a little financially, one viable solution you might want to consider is using a credit card to pay it off. Below are some things that you need to know before you consider this approach.
How it works
Credit cards can be good tools when managing debt provided that you have the discipline to only use the card for that specific purpose alone. You’ll need a card that offers good money transfer deals. This will then let you transfer the full amount on the card to your current account, which you can use to pay off your loan in full or gradually. For this purpose, you need to find a card that does not charge any interest on money transfer or one that charges low interest for a long term. To be offered one, however, you will usually need a good credit score.
Things to look out for
Before you push through with the debt transfer, there are certain things you must be wary of such as:
Fees from the lender. There are lenders that will charge a fee if you settle the loan early. If there, find out what the specific charges are. It is quite common for most banks to charge interest worth two months for sums that are repaid early. Card revert rate. While you may get the introductory period where the card charges low to zero interest rate; after the period expires, it will go back to charging the standard rate. This is why you need to work on paying off the balance as soon as you can before the standard rate kicks in.
Money transfer fees. Transferring money to the new credit card will usually incur a charge of around 3% of the transferred amount. If you can, try to find cards that will charge lower or those that do not charge a fee to lessen the costs.
What to do when the interest-free period runs out
If the interest-free period runs out and you are still unable to pay the credit card debt in full, you can consider applying for another credit card with a balance transfer rate of 0%. This will help trigger a new period that is interest-free. This should give you more time to get the debt repaid.
When using a credit card to pay off your loan, it is important not to use it for other spending. it can be very tempting but additional spending is only likely to make it harder for you to pay it off.