Car Loan Transfer? Discover Options When Banks Say No

Transferring a car loan to someone else might seem like a straightforward way to offload financial responsibilities, but it's often more complex than it first appears. Whether you’re trying to help a family member, manage an unexpected life change, or simply looking to offload a vehicle, understanding the intricacies can save you time, money, and stress.

Understanding Car Loan Transfers

Car loan transfers, also known as loan assumption, involve transferring the obligation to repay the loan from the original borrower to a new borrower. This process is more common in mortgages but is less frequently applicable to car loans. The critical factor is whether your lender allows such a transfer and under what conditions.

Most lenders in Australia, including the extensive panel that Esteb and Co work with, typically do not allow car loan transfers due to the unsecured nature of car loans compared to home loans. However, there are exceptions, and understanding the process and your lender's policy is essential.

Current Market Information and Options

In 2026, the Australian car loan market is dynamic, with interest rates ranging from 6.49% to 12%, depending on factors such as credit score, loan term, and whether the car is new or used. Transferring a loan might involve refinancing or selling the car to the person who wishes to assume the loan.

Lender	Interest Rate Range	Transfer Policy
Bank A	6.49% - 9%	No direct transfers, refinancing required
Bank B	7% - 10.5%	Case-by-case basis, strict criteria
Bank C	8% - 12%	Not permitted

As you can see, policies vary widely, and it’s crucial to reach out to your specific lender to understand their stance. Esteb and Co can assist by leveraging our network of over 83 lenders to find a suitable solution tailored to your needs.

Steps to Transfer a Car Loan

If you're considering transferring your car loan, here’s a practical step-by-step guide to help you navigate the process:

1. Contact Your Lender: Start by contacting your lender to ask if they allow loan transfers. Be prepared for them to require the new borrower to complete a credit check and meet other eligibility criteria.
2. Evaluate Refinancing Options: If direct transfer is not possible, consider refinancing your loan under the new borrower's name. This involves the new borrower applying for a new loan to pay off the existing one.
3. Prepare Documentation: Gather necessary documentation such as the original loan agreement, proof of income, and personal identification for both parties.
4. Negotiate Loan Terms: Work with the lender to negotiate terms that are agreeable to both you and the new borrower.
5. Complete the Transfer: Once approved, complete any paperwork required by the lender to finalise the transfer or refinancing.

These steps require careful consideration and often the guidance of a professional to ensure you’re making the best financial decision.

Tips and Considerations

Here are some expert tips to keep in mind when considering a car loan transfer:

• Understand the Costs: Be aware of potential fees associated with refinancing, such as early repayment fees or application fees for a new loan.
• Evaluate Credit Impact: Consider the credit implications for both you and the new borrower. Transferring the loan can impact credit scores and future borrowing power.
• Confirm Insurance Coverage: Ensure the new borrower arranges appropriate car insurance coverage, as this is often a lender requirement.
• Consider Alternative Solutions: If a transfer is not feasible, selling the car and settling the loan might be a more straightforward option.

Frequently Asked Questions

1. Can I transfer my car loan to a family member?
It depends on your lender’s policies. While some may allow it under strict conditions, it often requires refinancing the loan in the family member’s name.

2. What are the risks of transferring a car loan?
Risks include potential fees, impacts on credit scores, and the new borrower’s ability to meet loan obligations.

3. What happens if the new borrower doesn’t meet the lender’s criteria?
If the new borrower fails to meet the lender's criteria, the transfer will not be approved, and you will remain responsible for the loan.

4. Can Esteb and Co help with car loan transfers?
Yes, Esteb and Co can assist by providing access to a wide range of options through our 83+ lender panel, ensuring you find a solution that fits your needs.

5. Is refinancing a better option than transferring the loan?
In many cases, refinancing can be a more straightforward and feasible solution, especially if the new borrower qualifies for a better interest rate.

Transferring a car loan is not always simple, but with the right information and professional assistance, it’s possible to navigate the process successfully.