Can I transfer my car finance to another person?

It’s a special moment, when you find the car of your dreams and sign on the dotted line to secure your car finance agreement. You can hit the open road with the wind in your hair, sing along to your favourite tunes and enjoy your new wheels, all while spreading the cost over anything up to five years.

But, come to think of it, a lot can happen in five years. What if your circumstances change, and your finance agreement doesn’t suit you anymore? You might be thinking about passing it over to someone else, so let’s take a look at your options.

Can I transfer my car finance agreement to someone else?

We’re going to level with you here - the short answer is usually no, you can’t transfer your car finance agreement to someone else.

Everything about a car finance agreement is designed around you as an individual. The lender takes into account your financial history, credit score and affordability to figure out whether they can lend to you, and on what terms. Everyone’s circumstances are unique, so it’s not a case of just changing the name on the agreement - it’s a really complicated process.

Having said that, every lender is different, so if you’re considering transferring your finance to someone else, get in touch with your lender to see what they can do. Some lenders may consider transferring the finance, but the chances are the new person will need to have a credit check and go through the approval process.

What factors might affect whether I can transfer?

If you’re looking to transfer your finance because you’re having money troubles, or you’re struggling to keep up the repayments, talk to your lender. There will be things they can do to help you stay afloat.

If transferring to another person is an option, then the lender will need to carry out a credit check and affordability check on the new person. Just like when you originally took out your car finance agreement, the lender will need to decide how much of a risk it would be to lend to the new person, and this means getting an understanding  of their financial record, credit history and elements of their spending and outgoings that might affect their affordability.

What are the legal implications of transferring the agreement?

When someone else takes over a car finance agreement, they take on the legal responsibility for the loan. This means they’re now responsible for making the monthly repayments on time, and are liable for any fees or charges as part of the agreement.

One thing to bear in mind is that, legally, a car has both an owner and a keeper. Until the finance is paid off, the car finance company is the car’s legal owner, and the keeper is the person registered on the logbook (that’ll be you). Transferring the car finance to someone else doesn’t necessarily mean they become the car’s keeper instead of you - there’s a specific process to do this with the DVLA. Usually, to change the registered keeper, you’d need to end the current finance agreement early, or voluntarily terminate it, and then take out a new agreement in the name of the new keeper. More on this below - stay with us!

It’s also worth pointing out that it’s illegal to take out car finance on behalf of someone else without letting the lender know. This is called ‘fronting’ and is considered fraud. A car finance agreement is a legally binding agreement between a person and a lender, and it’s based on the person’s credit rating and financial circumstances. That’s why it’s fraudulent to sign up to an agreement on behalf of someone else.

Can I end my car finance agreement early?

Usually, if you want another person to take over your car finance payments, you’ll need to end your agreement and then they’ll need to apply for a new loan in their own name. The first step in bringing your agreement to an early end is to ask your lender for an early settlement figure. They’ll work this out based on how much is still left to pay, plus any fees or charges. If you’re happy to go ahead, let the lender know and pay the amount.


On the other hand, if your finances have taken a hit and you’re not in a position to pay off your debt early, there are other options. If you find yourself in this situation, it’s important to talk to your lender as soon as you can, as they’ll be able to help you find the best way to get on top of things.


One option to consider is a legal right called voluntary termination. This is when you return the car to the lender and end your car finance agreement before the official end of the term. The key condition that needs to be met is that you will have paid off – or be prepared to pay -  50% of your total balance already. There are ways to end hire purchase (HP) agreements early, and it’s possible to end personal contract purchase (PCP) agreements early too, so it’s worth taking the time to review all the options available.


Whatever your circumstances, the best thing to do is get in touch with your lender. They can talk you through the options and agree a plan with you.

What other options are available?

If you’re having trouble managing your car finance, there are a few options to consider as alternatives to transferring it to someone else.

Refinancing

You could end your existing car finance agreement by absorbing it into a new one, either with your current lender or a different one. This can be a way to make your repayments more affordable by getting a better interest rate, a longer timeframe, or both.

Guarantor finance

Taking out car finance with a guarantor gives you (and the lender) a safety net. If you’re unable to make your repayments, the guarantor steps in and pays on your behalf. It can be a good option if your credit score is low, or if your income is unpredictable because you’re self-employed.

Joint finance

This is when you take out car finance with someone else, usually your partner or a family member. You’re both equally liable for the loan, so you share the responsibility. It can be a handy way to split the cost of buying a car, and your higher combined income and improved affordability might mean you qualify for a more expensive car.