If you are looking to sell your car without paying off your existing car loan. In that situation, you can consider transferring your existing car loan to another person. But there are certain requirements to do that. If you are planning to transfer your loan to someone else, then you should keep the following points in mind for a hassle-free balance transfer.
Car Loan Transfer Process: Steps and procedures
Check out the current loan agreement details
Before going for a loan transfer to another person, make sure that you have gone through the details of your loan documents. There you can find out the information about whether it is possible to transfer your loan to another person or not. However, if you are unable to find this information in the loan document, you can also contact your lender with whom you have taken the loan and check if such an option is available with them.
Find a suitable new borrower with good credit history
The next step will be to find a reliable borrower who can take over your car loan. Ensure the new borrower that you find should have maintained a good credit history, have a stable income, and all the supporting documents in the form of income proofs, residence proof, etc. The new borrower may also be asked to submit their KYC (know-your-customer) documents as per the requirement of the bank. The bank will transfer your loan only when it is satisfied with the repayment capacity and history of the new borrower.
Checking car dealerships
If you are not able to find the most suitable buyer to transfer your loan, in that case, you can also contact a car dealership. These dealerships have contacts related to purchasing used vehicles and it will get easier for you to find finding a buyer through the car dealer.
Transfer the car registration certificate
The existing owner is required to transfer the registration certificate along with the loan to the new buyer. To do this, you need to visit your closest Regional Transportation Office RTO. They will help you in transferring the ownership of the vehicle to the buyer. The RTO will levy charges on the transfer process. After the background check and documentation process is done by the lenders, the new owner is issued a 'Registration Certificate' in his or her name.
Transfer the motor insurance policy
You also need to transfer your motor insurance policy in the name of the new buyer. You should do this to ensure that you do not have to pay insurance premium anymore. Once the car registration and the loan are transferred to another person. Then, you need to submit all the related documents (updated loan documents, registration certificate copy, etc.) to the insurance provider. After getting the insurer's approval, your policy will also get transferred in the name of the new buyer.
Submitting the required documents
The new borrower will have to submit the following documents such as:
The bank may request more documents as per their requirement.
Check the charges associated with the transfer
The banks levy processing fees and transfer fees for changing the loan borrower. Depending on the remaining loan tenure and principal, the charges will vary. So, you need to check with your lender to find out the charges related to the transfer process.