Transfer Car Loan? Here's How to Gain Control Fast

Transferring a car loan to another person might seem like a straightforward solution when circumstances change. Whether you’re looking to upgrade your vehicle, facing financial challenges, or simply want to pass the car to a family member, understanding the nuances of transferring a car loan in Australia is crucial. This article will guide you through the process, highlighting the current market dynamics, key considerations, and actionable steps to ensure a smooth transition.

Understanding Car Loan Transfers

In Australia, transferring a car loan to another person is not as simple as handing over the keys. A car loan is a financial agreement between you and your lender, and your lender's approval is paramount to making any changes to the loan's terms or ownership. Essentially, if you wish to transfer a car loan, the new borrower must qualify for the loan under the lender’s criteria. This involves a thorough assessment of the new borrower’s creditworthiness and financial stability.

This process is somewhat akin to applying for a new loan. The new borrower will need to submit an application to the current lender, and only upon approval can the transfer be completed. It’s important to note that not all lenders permit car loan transfers, making it vital to check with your lender first.

Current Market Rates and Requirements

As of 2026, car loan interest rates in Australia typically range from 6.49% to 12%, depending on various factors including the borrower’s credit score, the age of the vehicle, and the loan term. Lenders on Esteb and Co's panel offer competitive rates due to their comprehensive access to over 83 lenders, increasing your chances of finding a suitable deal.

Eligibility criteria for transferring a car loan generally include:

• A stable income and employment history of the new borrower
• A satisfactory credit score, usually above 620
• Proof of ability to repay the loan
• The vehicle must be insured and in good condition

Let’s explore how these rates and requirements compare across different types of lenders.

Steps to Transfer a Car Loan

Transferring a car loan involves several key steps. Here’s a step-by-step guide to help you navigate the process:

1. Contact Your Lender: Start by contacting your current lender to inquire about their policy on loan transfers. Not all lenders allow transfers, so this step is crucial.
2. Prepare the New Borrower: The person taking over the loan must meet the lender’s eligibility criteria. Gather all necessary documents such as proof of income, credit reports, and ID.
3. Submit an Application: The new borrower should fill out an application with the lender. This may include a credit check and a review of their financial situation.
4. Get Approval: Wait for the lender’s decision on whether they approve the transfer. If approved, you can proceed with the transfer agreement.
5. Complete Documentation: Sign the necessary paperwork to finalize the transfer. This may also include updating the vehicle’s registration details.
6. Notify the Insurance Company: Ensure the car insurance is updated to reflect the new owner’s details.

Tips and Considerations

Successfully transferring a car loan requires careful consideration. Here are some expert tips to keep in mind:

• Evaluate the New Borrower’s Financial Stability: Ensure the person taking over the loan has a stable financial background to avoid future complications.
• Understand the Costs: Be aware of any transfer fees or charges associated with the change in ownership.
• Consider Refinancing: Sometimes, refinancing the loan might offer a better solution than a direct transfer, especially if interest rates have dropped.
• Consult with a Mortgage Broker: Leveraging the expertise of a broker, like those at Esteb and Co, can provide you with insights from over 83 lenders, maximising your options.

Frequently Asked Questions

1. Can I transfer my car loan if I have a bad credit score?
   Transferring a loan with a bad credit score can be challenging. The new borrower must have a good credit profile to be approved.
2. Are there any fees involved in transferring a car loan?
   Yes, some lenders may charge a transfer fee. It’s best to check with your lender for specific details.
3. What if my lender doesn’t allow transfers?
   If your lender doesn’t allow transfers, you might consider refinancing the loan with another lender who does.
4. Can I transfer my car loan to a family member?
   Yes, as long as the family member meets the lender’s eligibility criteria and the lender allows transfers.
5. How long does the transfer process take?
   The process can take anywhere from a few days to several weeks, depending on the lender’s procedures and the new borrower’s financial situation.