Q. I bought a car on loan two years ago. However, I am selling the car now to a friend with a few more years for the loan left. Can I transfer the loan also, and what do I need to keep in mind? Aryan Jha
A. Your car loan can also be transferred to the person who is buying your car. However, it is a complex and expensive process. You will have to shell out money for paying the processing fee charges for the loan transfer, car registration transfer, and car insurance transfer fees. You may consider the idea of splitting the cost, but it may not appear to be a viable option to the buyer. However, if you reach an agreement over the car loan transfer, remember to take care of these points:
– Your loan agreement should have a clause that allows car loan transfer. You can also connect with your lender to know if this is allowed. As a thumb rule, this transaction should only be undertaken with your lender’s knowledge.
– Your lender will also check the credit history of the new borrower (car buyer) before allowing the loan transfer. As a precaution, you should also check the credit history of the buyer before taking this forward.
– Car loan transfer also requires you to get the car registration changed in the name of the new buyer. Visit the nearest RTO (Regional Transportation Office) to initiate this process and pay the necessary charges. The RTO may also verify your credentials with your lender before issuing the registration certificate in the name of the new buyer.
– To avoid getting insurance renewal notices, it is important that you get the car insurance policy transferred to the new buyer. Keep all relevant documents handy like loan documents, registration certificates etc.
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