You may have fulfilled your wish of car by buying it on loan. But after repaying the EMIs for a certain period of time, you might be finding it difficult to carry on with the loan. You can then think of transferring the loan to another individual willing to buy your car and get relieved from the liabilities. All you require then is to follow simple steps that are discussed in the points below.
Car loan transfer clause in agreement papers
Look whether the clause of car loan transfer is mentioned in the agreement papers or not. If you are not sure of that, then visit the bank branch to get the clarity on the loan transfer process. It is imperative that the loan agreement papers must mention that you can transfer your car loan to another individual. Else it will be difficult to do the same.
Find the new borrower via car dealer
You can approach a recognized car dealer if you are struggling to find a new borrower to whom your loan can be transferred. The dealer may have some people in their list of contacts who might be interested in buying the second hand car on loan. However, the new borrower must have stable income and a proven repayment track record with banks for ensuring successful transfer of car loan. Any default by the prospective borrower in the past will adversely affect his/her credibility and may compel your lender to disallow the transfer of your car loan to the concerned individual. If you have found someone with a good credit history, then you can ask your lender for the documents related to car loan transfer. The documents will have to be presented by the new borrower. Normally, the new borrower has to submit documents showing proofs of identity, address, income as well as a form requesting the transfer of your car loan to him/her.
Change car registration
Car loan transfer not only requires the transfer of loan documents but also the change in car registration. You must visit the nearest RTO office for the same. First, you will have to submit the bank documents showing the details of new borrower to the RTO office. Thereafter, you must request the RTO authorities to transfer the car in the name of new owner. These authorities will then undertake a background verification with your lender before changing the car registration details. The process will take around two weeks to complete. You may have to bear some charges for changing the registration of the car.
Approach your car insurer
You must ensure that the person taking over your loan complies with the insurance requirements. Approach your car insurer as it will tell you the terms and conditions associated with the transfer of car to another individual. You must submit the bank documents to the insurance agency to allow them to make necessary changes, and thus prevent yourself from paying additional premiums.
Don’t visit RTO office or insurer before loan transfer approval
You must avoid visiting the RTO office or your car insurer before the approval of your loan transfer request and the issuance of necessary documents by the bank. If you neglect this and if some damage being caused to your car, then you will be held liable for the same during the loan transfer.
Be mindful of transfer fees
There could be a certain loan processing or transfer fee which would be charged by your lender. The fee will be based on the tenure and amount of loan that is left to be paid. So get aware of the car loan transfer charges and discuss it clearly with the new borrower.