Do you want to sell your Car? But, loan of the car is not yet paid then the best way to do that is to transfer your car loan to another person and remove your financial obligation from that car. This way, the car can be sold without having to pay the loan upfront and then sell the car.
Traditionally, whenever, you are selling a car, you’ll have to settle your loan account by paying the loan amount fully and then sell the car to anyone. This way requires arranging the amount upfront which may put your finances at risk.
With Car Loan Transfer, you can transfer your financial obligation in regards to the car to the person purchasing the car and transfer the ownership of the car as well.
In this article, we will discuss how to transfer a car loan to another person, Documents Required, Tips, and much more.
How to Transfer a Car Loan to Another Person?
Before applying for a car loan transfer process, you’ll have to check whether you are eligible for such a transfer or not. To do that, you’ll have to check for some documents and legality to do so. Here are some of the things that you’ll have to check:
Read your Loan Agreement
The very first step when it comes to transferring your used car loan to another person is to read your loan agreement. Your loan agreement must have some essential clauses that talk about the loan transfer process.
If your loan clause does not mention these clauses, then you’ll have to contact the bank and ask the bank representative about the Loan transfer.
It is important to note that you go through the loan agreement thoroughly to understand the process and any charges or fees associated with the loan transfer.
Find a Buyer
After the legality of the Loan transfer is conferment by thoroughly going through the agreement, you’ll have to find a buyer for your car who is willing to accept the car with the loan amount. You can also contact a dealer who can find a buyer for you and sell your car to them.
Evaluate Buyer’s Credibility
After finding the buyer, you’ll have to evaluate whether the bank will accept his/her financial credibility for the transfer of the loan or not. For this, the bank will find his/her credit score.
A credit score is important for the bank to issue the loan along with other documents like income documents, etc. Any problem with the documentation of the buyer could result in the rejection of the bank from transferring the loan.
Talk to the Bank
After evaluating the documents from your side, you can now approach the bank and tell them about your decision to transfer your Car loan to another person. Ask the person to visit along with you and both of you should have the documents with you.
You can also ask the bank to send a bank representative to your residence where you can talk about the loan transfer. The bank representative will fill your form with details like loan account number, name, address, name of the person transferring to, etc.
After that, the bank will review your application, contact the buyer make some general checks, and prepare a new agreement for the car loan transfer with information like teneur, interest rate, etc.
The agreement is required to be signed by the buyer and the bank will take some time to further finalize the loan disbursal.
Transfer the car Registration
Now that the loan disbursal is confirmed, you’ll have to parallelly begin the car registration transfer process. This can be done by visiting the local RTO office with the relevant documents and forms and submitting them to the RTO officer. After submitting the transfer papers, your application will be processed and the car registration transfer process will be initiated. It will take 3-4 weeks for the Registration Certificate with the Buyer’s name to reach the buyer’s residence.
Just like Registration Transfer, you are also required to transfer the Incusrnace as well. Insurance companies easily transfer the insurance after completing the insurance transfer process which includes some documentation like the form, the Aadhaar card of the buyer, the buyer’s application copy of registration documents, etc.
Documents Required for Car Loan Transfer
The following are the documents Required for Car Loan Transfer-
- A form requesting the transfer of the loan to their name
- ID proof- Aadhaar Card, PAN Card, Driving License, etc.
- Address proof- Aadhaar Card, PAN Card, Electricity bill, etc.
- Income proof- ITR Filings, PAN Card, etc.
For the car registration document to reach you it can take 3-4 weeks and sometimes more depending on your RTO office.
After the submission of the loan application, verification is done against the applicant, and upon complete verification, it will take 2-3 working days for the loan to get completed, and in between, the Car transfer process can be done.
Yes, you can, however, you are required to carry the photocopy of the previous owner’s document along with the car purchase deal which you have signed with the previous owner.