If you’re thinking of selling your car without paying off your Car Loan, you can do so by transferring your Car Loan. Read on to know more.
Buying a car with your own money is probably a dream everyone nurtures (especially those who’re dependent on Uber/Ola for their daily commute and the uncertainty that comes with them). Say you have finally bought your dream car by taking out a Car Loan but a few years into it realise that you’re not being able to afford the monthly repayments. For situations like these, banks offer you the option of transferring your Car Loan to another person as long as you’re transferring the ownership of the vehicle to that person as well.
A Car Loan transfer is a complicated process and if you’re considering it, you’ll need to carefully assess the costs that are associated with it. These costs include processing fee charges by the bank for the loan transfer, car registration transfer and car insurance transfer fees. All these charges together may make the process of loan transfer an expensive, unviable proposition for the buyer. In fact, because of this, the buyer may insist on splitting the cost of the loan transfer with the seller.
Here are the steps that you’d need to follow and things you should keep in mind while transferring your Car Loan to another person:
Check The Current Car Loan Agreement:
Go through your Car Loan agreement carefully to check if the agreement has a clause that allows you to transfer your Car Loan to someone. If you’re unable to find this information, you can visit the branch or contact your lender to check if such an option is available with them. Ensure you and your lender are on the same page with regard to the terms and conditions of the Car Loan transfer. It is imperative that your Car Loan agreement allows for a third-party transfer.
Additional Reading: What To Do If You Can’t Repay Your Car Loan?
Analyse The New Car Buyer’s Creditworthiness:
The new car buyer (borrower) who you’re thinking of transferring the Car Loan to should have a good credit history. If your Car Loan agreement allows for third-party transfer before you zero in on a buyer, here are a couple of things you should keep in mind. Ensure the new car buyer has a stable income, a good credit history and all the supporting documents that may be necessary for the loan like residence proof, income proofs etc. Before authorising the transfer of your Car Loan to the proposed new buyer, the bank will run a credit check on the proposed new buyer (borrower) and will sanction a loan only when it’s adequately satisfied on the repayment capacity and history of the borrower. If the bank requests, the new borrower might even have to submit KYC (know-your-customer) documents.
Additional Reading: Popular Used Car Loans Of 2019
Transfer The Car Registration Certificate:
When you’re transferring your Car Loan, you will not only need to transfer your loan documents but also change your car registration. You’ll have to visit the nearest RTO (Regional Transportation Office) and request them to transfer the car in the name of the new owner. The RTO will undertake a background verification with your lender before altering the car registration details. They may also levy charges on the transfer process. Once the lender completes the background check and other documentation processes, it will issue a ‘Registration Certificate’ to the new owner in his/her name.
Transfer The Motor Insurance Policy:
While you’re getting the car registered in the name of the new buyer, remember that you will also have to transfer the motor insurance policy in their name. This is an important step as this would mean that you would be free from the liability of paying insurance premiums, once the car registration and the loan are transferred to another person. To initiate this process, you’ll have to submit all the related documents like updated loan documents, registration certificate copy etc. to the insurer. Once you get the insurer’s approval, your policy will also get transferred in the name of the new buyer.
Additional Reading: Car Loan Default – All You Need To Know
Avoid Visiting The RTO Office Or Car Insurer Before Loan Transfer Approval:
Unless your Car Loan transfer request is approved and the necessary documents are issued by the bank, you must avoid visiting the RTO office or your car insurer.
What Should The Buyer Of The Used Car Do?
The Car Loan transfer request doesn’t end with transferring the Car Insurance and car registration in the name of the used car buyer. The used car buyer has to apply for a Used Car Loan if they don’t have enough money to buy the car. Banks levy a higher interest on Used Car Loans than a loan that you may take out for a brand-new car. You will also get a maximum tenure of 5 years to repay the loan. This also depends on the age of the car. If the car is quite old, the bank may even reduce the tenure of the loan to three to four years.
The used car buyer can choose to apply for the Used Car Loan either with the existing lender or any other lender agreeing to finance the purchase. Their loan eligibility will be scrutinised as per the lending bank’s norms. Once the loan is granted, the used car buyer can start paying the EMIs on his own loan.
Want to enjoy the pleasure of driving a new car without having to buy one? You can drive a new car every year without having to worry about having enough money for a down payment, thanks to Revv OPEN. Revv OPEN is a Car Lease model whereby you can own a new car every year by just making a monthly payment based on the model you choose. Under this model, you have the option of owning a car for a maximum of 48 months after which you can either choose to return the vehicle or take complete possession of it by paying an estimated sum. With a Revv-OPEN car, you won’t need to pay any maintenance charges, road tax, down payment etc. Revv-OPEN will even provide you with roadside assistance.
Additional Reading: Car Lease Vs. Car Loan: Which One Is Right For You?
Sounds like it’s right up your alley? Why don’t you go ahead and check if you’re eligible for it then?