How to Transfer a Car Loan to Another Person In Few Steps? 

Do you want to sell your car but still have an outstanding car loan? Depending on your lender’s terms, you may be able to transfer the car and the remaining loan obligation to another person, subject to the lender’s approval. The new borrower will usually need to meet the lender’s eligibility requirements before the transfer can be completed. 

This is different from a car loan balance transfer to another bank. In a balance transfer, you remain the borrower but move the outstanding loan from your existing lender to a new lender, generally to access better interest rates or repayment terms. In a transfer to another person, the responsibility for the loan and typically the ownership of the vehicle move to the new borrower. 

If you are planning to sell a financed car, understanding these differences can help you follow the correct process. 

Understanding Car Loan Transfer 

A car loan transfer can refer to two different situations: 

1. Transfer of a car loan to another person: The outstanding loan responsibility is transferred to a buyer, family member or another eligible person, subject to the lender’s approval. The vehicle ownership and insurance may also need to be transferred to the new borrower. 

2. Car loan balance transfer to another lender: You remain the borrower, but the outstanding loan is shifted to a new bank or financial institution. Borrowers generally consider this option when another lender offers a lower interest rate, better repayment terms or improved service. 

Since the process, documentation and eligibility requirements differ, confirm with your existing lender which type of transfer you want to initiate and whether it is permitted under your loan agreement. 

How to Transfer a Car Loan to Another Person: Step-by-Step Guide 

You can follow these steps to transfer your car loan to another person. 

Step 1: Verify Your Loan Terms 

Start by reviewing your existing car loan agreement. Not every lender permits the transfer of a car loan to another person. 

Check the terms and conditions or contact your lender to understand whether a transfer is allowed and what conditions, fees and documentation apply. 

Step 2: Find a Buyer for Your Car 

If your lender allows a transfer, find a buyer who is willing to purchase the vehicle and take responsibility for the outstanding loan. 

Make sure the buyer understands the remaining loan amount, applicable EMIs and other obligations before proceeding. 

Step 3: Review the Buyer’s Profile 

The person taking over the loan must usually satisfy the lender’s eligibility requirements. 

The lender may evaluate factors such as the buyer’s: 

• Credit score and repayment history 

• Income 

• Employment or business stability 

• Existing financial obligations 

• Ability to repay the remaining loan 

A good credit profile and stable income can improve the chances of the transfer being approved. 

Step 4: Seek Approval from the Lender 

Once you have identified a suitable buyer, inform your lender and submit a request to transfer the car loan. 

The lender will review the new borrower’s creditworthiness, repayment capacity and documents before approving the request. 

You should also ask the lender about the No Objection Certificate (NOC) or other consent required to transfer the loan and vehicle. The lender’s approval or NOC may be required before the ownership details can be changed with the RTO. The exact process can vary across lenders. 

Step 5: Transfer the Car Registration 

After receiving the lender’s approval, complete the vehicle ownership transfer with the relevant Regional Transport Office (RTO). 

The Registration Certificate (RC) should be updated with the new owner’s details. You may need to submit the lender’s NOC, transfer forms and other documents required by the RTO. 

Make sure both the loan and vehicle ownership records reflect the new borrower correctly. 

Step 6: Complete the Loan Transfer Documentation 

Submit all documents requested by the lender and complete the loan transfer paperwork. 

Depending on the lender’s process, the new borrower may need to sign a fresh loan agreement or other documents accepting responsibility for the outstanding loan. 

Once the transfer is completed, confirm in writing that future EMIs and the outstanding loan balance are the new borrower’s responsibility. 

Step 7: Manage the Insurance 

The vehicle insurance policy must also be updated after the ownership transfer. 

Inform your insurer about the change in ownership and submit the required documents to transfer the insurance policy to the new owner’s name. The insurer may ask for the updated RC, lender-related documents and other paperwork before completing the change. 

Avoid leaving the insurance policy in the previous owner’s name after the vehicle ownership has changed. 

Step 8: Pay the Applicable Fees or Charges 

You may have to pay charges for transferring the loan, vehicle registration and insurance. 

You and the buyer can decide who will bear these costs. Clarifying this before starting the process can help avoid disputes later. 

Documents Required for a Car Loan Transfer 

The documents required to transfer a car loan to another person may vary depending on the lender, RTO and applicant profile. 

Common documents may include: 

• Car loan transfer request form 

• Identity proof of the existing and new borrower 

• Address proof 

• PAN card and applicable KYC documents 

• Passport-sized photographs 

• Income proof of the new borrower 

• Recent salary slips for salaried applicants 

• Recent bank statements 

• Financial statements for self-employed applicants, where applicable 

• Existing car loan statement 

• Copy of the vehicle Registration Certificate (RC) 

• Current motor insurance policy 

• NOC or consent from the existing lender 

• RTO ownership transfer documents 

The lender may ask for additional documentation depending on its internal requirements and the profile of the new borrower. 

Eligibility Criteria for the New Borrower 

A car loan cannot usually be transferred to another person simply through an agreement between the buyer and seller. The new borrower must meet the lender’s eligibility and credit requirements. 

Lenders may consider factors such as: 

• Credit profile: A healthy credit score and repayment history may improve the chances of approval. 

• Stable income: The new borrower should have a consistent source of income and sufficient repayment capacity. 

• Age: The applicant should fall within the lender’s prescribed age criteria. 

• Employment or business stability: Salaried and self-employed applicants may need to provide relevant income and employment or business documents. 

• Existing financial obligations: The lender may review other loans and EMIs to assess repayment capacity. 

• Vehicle eligibility: The age, condition and valuation of the car may also need to meet the lender’s norms. 

• Documentation: The borrower must provide the required KYC, income, loan, RC and insurance documents. 

• Lender approval: The existing lender must approve the transfer and may require an NOC or other documentation. 

The exact eligibility requirements vary from one lender to another. 

Charges Involved in a Car Loan Transfer 

There may be several costs involved when transferring a car loan to another person. These can include: 

• Loan transfer or processing fee: The lender may charge a fee for processing the transfer request. 

• Stamp duty: Applicable stamp duty may be charged on certain transfer documents, depending on the state and transaction. 

• RTO charges: Fees may apply for transferring the vehicle registration to the new owner. 

• Legal or documentation charges: These may apply if additional legal or documentation support is required. 

• Insurance-related charges: The insurer may levy applicable charges or revise the premium when transferring the policy. 

Charges can vary based on the lender, RTO, insurer and location. Check the applicable costs before initiating the transfer. 

If you are selling your car to better manage your finances, you can also consider a personal loan for additional financial support. With a Fibe Personal Loan, eligible borrowers can access up to ₹10 lakh with flexible repayment tenures of up to 36 months. You also get zero foreclosure charges, subject to applicable terms and conditions. To proceed, download the Fibe app or apply through the website. 

FAQs on Transferring a Car Loan 

1.Can the car loan balance be transferred? 

Yes, depending on the lender’s policies, the outstanding car loan may be transferred to another eligible person with the lender’s approval. 

This is different from a car loan balance transfer to a new financial company, where you remain the borrower but move your outstanding loan to another lender for potentially better rates or repayment terms. 

2.Can I use a balance transfer to pay off a car loan? 

A car loan balance transfer allows you to move your outstanding loan from your current lender to another lender. 

The new lender generally repays the outstanding amount to the existing lender and creates a new loan under revised terms. Borrowers may consider this if they can get a lower interest rate, different tenure or better repayment conditions. 

Review the processing fees, foreclosure charges and other costs before transferring to understand whether the change will actually save you money. 

3.Can I transfer my car loan to a family member or friend? 

You may be able to transfer a car loan to a family member or friend if your lender permits it and the new borrower meets its eligibility requirements. 

The general process involves: 

1. Checking whether your existing loan agreement allows a transfer 

2. Discussing the transfer with your lender 

3. Checking whether the new borrower meets the lender’s eligibility criteria 

4. Getting the lender’s approval and applicable NOC 

5. Submitting the required documents 

6. Transferring the vehicle registration 

7. Transferring the motor insurance policy 

8. Paying the applicable charges 

The transfer should only be treated as complete after the lender confirms that the loan responsibility has moved to the new borrower. 

4.Can the person I’m transferring the car loan to be from a different city or state? 

A transfer to a person in another city or state may be possible, subject to lender approval and applicable RTO requirements. 

An interstate transfer can involve additional documentation for vehicle registration, an applicable NOC, insurance updates and registration formalities at the relevant RTO. Check the requirements with your lender and RTO before proceeding. 

5.Will my car’s ownership also transfer with the loan? 

If you are selling the financed vehicle and transferring the loan to the buyer, the vehicle ownership should also be transferred to the new owner’s name through the RTO. 

However, simply arranging for a family member or friend to make your EMI payments does not automatically transfer either the loan liability or legal ownership of the car. A formal transfer requires the lender’s approval and completion of the relevant loan, RTO and insurance formalities. 

6.Is a No Objection Certificate (NOC) required to transfer a car loan? 

A lender’s NOC or formal consent is generally an important part of transferring a financed vehicle and its loan obligation to another person. 

The NOC confirms that the lender has no objection to the proposed transfer, subject to its terms and approval process. It may also be required to complete changes to the vehicle’s registration with the RTO. 

The exact NOC requirement and stage at which it is issued can differ by lender, so confirm the process with your existing bank or financial institution before transferring the vehicle. 

7.Does transferring a car loan affect my credit score? 

A properly completed car loan transfer does not automatically reduce your credit score. However, your credit history can be affected if you miss EMIs, have overdue payments or do not complete the transfer correctly before stopping repayments. 

The lender will generally also review the new borrower’s credit profile before approving the transfer. The new borrower should ensure that future EMIs are paid on time after the loan responsibility is transferred. 

Before considering the process complete, obtain confirmation from the lender that the loan has been transferred or closed in your name and check your credit report later to ensure the loan status has been updated correctly.