When you buy a new or used car or even take a car on lease, the assumption is that you will drive it for a specified number of years, but what needs to be done if you want to get out of your loan? There is a possibility that you have agreed to an interest rate that was over the moon and you can’t afford it now because circumstances change, jobs are lost, and life happens. And for some reason you are not able to pay the monthly payments then your credit score will drop more.
As the car owner and the borrower on the car loan, you have very narrow options. You can let your family member take over the car and make the payments to you & in turn you can pay the creditor. So, let us have a look on how to take over car payments.
How to Let a Friend Take Over Your Car Payments
If you’re willing to trust your friend and let them take over payments on your car. It is possible but in some States it is illegal. Once you will hand the new owner the keys with a verbal agreement then they will send you a check every month for the payment. Your friend can drive your car and it isn’t yours anymore. However, in the eyes of your lender, it still is your car. Your financial institution expects the monthly payments whether your friend sends you the money or not. So you need to let a very trustworthy friend so they won’t stop paying you.
Before you decide to lend your car to the people you know, we suggest having a written agreement that you can tailor to your needs. It is usually known as a sub lease and you want to check the person who you are lending your car to. There are instances where lenders may not allow a sub lease and view you in violation of the loan’s terms. Once you have agreed with you and your friend taking over your car payments, you both sign and hope all goes well. If they stop sending you the payment then you can be stuck with the monthly payment that you can’t afford.
Other problems with such an agreement are unexpected car accidents and your friend is driving. Now you have insurance to deal with, whose fault it was and how will pay for the damage & repairs & even for the possible injuries. So, no matter who is guilty it will put you in the difficult position. You can list your friend as the driver on your auto insurance, which can help you get out of this situation.
Another problem that comes while lending your car is when your friend racks up parking tickets, unpaid tolls and other infractions and doesn’t pay them. You will get all these bills along with the headaches to visit the court. Even with the sublease you will still be registered owner of the car, and the financial burden would be on you. If your friend fails to inform you about these failed tickets then your credit score will be affected. Any such damage will devalue the total value of your car and even degrade it.
There are no ways to get out of such situations against such happenings. However, we still suggest you to be enforceable unless you go to court.
What if You are the One Taking Over a Friend’s Car Payment?
If one of your friends wants to pay the monthly payment in exchange for driving their car, you want to consider a few options to protect yourself.
- Be sure your friend has an agreement which you can have a look at.
- You want a notice before your friend takes your car back.
- Have your friend include the payment reminder the money you spend them every month will go to the car loan.
- Get your own car insurance for better protection.
- Write everything in the agreement, even the smallest thing.
Here’s everything you need to know when you lend a car or want anyone to lend your car. It has the chance for both success and failure. While this arrangement is possible, the smartest idea may be to find any other way to make your monthly payments, refinance your loan or sell your car.