If you are having trouble making your monthly car loan payments, you may be wondering if it’s possible to refinance your car in someone else’s name. Can someone else simply take over the loan while you keep the car? Can you do it through an auto refinance?
So you are wondering how to refinance a car in someone else's name. Traditionally speaking, you cannot simply refinance your car in another person’s name. But you can refinance your car twice to get the same result (bear with us, it’s a bit complicated, and there is no guarantee it will work in the long run).
First, you need to add a cosigner onto your loan. So you will need to refinance once to add on your cosigner. Then, when that is complete, you will need to refinance again and remove yourself from the loan. So it will require you to refinance your car twice. Some lenders may think that not enough time has passed since your initial refinance, and there’s a chance you may not qualify.
It’s important to ask yourself why exactly you want to refinance in someone else’s name. Depending on your answer, there may be a simpler option for you to refinance. Auto loan refinancing can be worthwhile in certain situations, while selling your car might make more sense in other situations.
If your monthly payments are too high, refinancing on your own might be enough to help make your payments more manageable. Refinancing your car can help lower your monthly payments in two ways.
If your credit score has improved and/or the market interest rates have gone down since you originally financed your car, you may qualify for a lower APR. This will save you money in interest payments every month.
Even if you do not qualify for a lower APR, refinancing your car loan will allow you to change the repayment period. Stretching out your repayment period will automatically reduce your monthly payments, because instead of paying back the loan over say 36 months, you can now stretch your payments over say 48 months. You will end up paying more in interest in the long run, but it can save you hundreds of dollars per month and make your cash flow situation much easier to manage.
If your credit score is lower than your friend or family member, you may want to refinance in their name to secure a lower rate. But you don’t need to remove yourself entirely from the loan to enjoy the benefits of their high credit score. By adding them as a cosigner, the lender will consider your credit scores together. This can secure you a lower rate while still allowing you to keep your car and keep your name on the loan.
Adding a cosigner can actually help improve your credit score. If the cosigner's credit can reduce your APR, you will be more likely to make consistent, on time payments. This can help improve your score a great deal by increasing the payment history portion of your credit score.
If you want to refinance your car in someone else’s name as a means to get rid of your car, you will need to formally sell your car. In other words, you will need to transfer the deed and have them finance your car separately.
You could also consider trading your car in at the dealership to get a different car.
Are there any auto refinance companies that will let you simply change borrowers on the same loan? Unfortunately, no. There is no way to simply swap one person’s name out for another. This is because interest rates and financing deals are highly dependent on the applicant’s unique situation and credit score. It is not a one size fits all loan – lenders make their decisions based on who they feel will most likely pay them back.
While you cannot refinance your car loan in someone else’s name, you can refinance your car loan either independently or with a cosigner. Here’s what you should consider when looking for the best auto refinance companies.
One of the most important factors when deciding who to refinance with is the interest rate. By reducing the interest rate, you will automatically save money (and that’s the whole point, right?) The interest rate will be based on a number of factors, such as:
Your credit score
Your payment history
Your income
Your debt-utilization ratio
Prevailing interest rates
The interest rates you are offered can vary greatly based on the lender, so you should be sure to check interest rates when comparing options.
Some refinancing companies have hefty prepayment penalties. Be sure to read the fine print of each offer to determine what you will be responsible for should you pay off your loan early. Remember, there is no limit to the number of times you can refinance, so you may wish to refinance again in the future. And you don’t want big penalty payments to stand in your way.
Each offer may have different options for repayment periods. Think about what works best for your cash flow situation – a shorter repayment period will save you money in interest but result in higher monthly payments, while a longer repayment period will cost more in interest but result in lower monthly payments. This can change your monthly budget a great deal, so be sure to think this decision through and see what works best for you.
It’s always good to check out a company’s customer satisfaction ratings. What are their current clients saying? Do these lenders communicate clearly? Websites like TrustPilot, Better Business Bureau, and Lending Tree can give you insight into what other customer experiences are like.
Complaints with lenders are often related to issues with communication and an overall lack of transparency as to how your payments are being allocated. Read through comments and complaints to learn from the experiences of others and avoid problematic lenders.
Using a company that specializes in refinancing, like Auto Approve, will make it incredibly easy to compare lenders. Auto Approve has relationships with some of the best and most trusted lenders in the business, so you can rest assured you are in good hands.
If refinancing your car loan sounds like a good idea, get started with Auto Approve today! Our dedicated team is here to answer all of your questions and help you find the best lender for your auto refinance.