In most cases, the short answer is no. An existing car finance agreement can’t be transferred to someone else because each car finance agreement is tailored to the individual for whom the agreement was approved. Because everyone has their own credit history and finance record, a direct transfer to another person is very complicated.
A reputable lender will always exhaust all avenues to keep you and the vehicle together. If you wish to exit your arrangement because you can no longer afford it, then it is unlikely that they would want you to refinance, in any form.
Before you take out any kind of car finance, right from the start it’s really important to be sure that any credit agreement you apply for is in your best interests. If you are a young driver or you have a chequered credit history, be painstaking in your research into all of the available finance options. There may be certain credit agreements that are more suited to your circumstances than others.
Joint finance
If you’d benefit from the security of another person being financially involved, then a joint finance car loan could be a good option. Joint finance is where two people who live at the same address – usually family members or married couples – apply for finance together. Both applicants legally agree to pay off the whole debt, even if the other is unable to pay. (It’s important to be aware that if a relationship breakdown occurs, the joint finance agreement is still legally binding; the actions of the other person could affect your credit record.)
Although Oodle don’t offer joint car finance deals, some lenders do. Bear in mind that unless you are applying specifically for joint finance with a lender that offers this arrangement, applying for finance without disclosing that you don’t intend to be the registered keeper is illegal. Learn more about registered keepers and legal responsibilities surrounding car ownership.
Guarantor car finance
Guarantor car finance is a type of finance where another person (the guarantor) agrees to step in and cover the loan repayments if you find yourself unable to. Guarantor car finance may be worth considering if you have bad credit and are unable to take out a loan by yourself, or if you are a young driver with little or no credit history. Read more about guarantor car finance.
Usually, if another person wants to take over your car finance payments, you will need to close your existing agreement and they will need to apply for a new loan in their name. This means buying the car from the legal owner – whether that’s you or a finance company – and using the funds to clear your outstanding debt. An unsecured personal loan might be the easiest way to do this.
If you are struggling to make your loan payments, please don’t suffer in silence. If you are experiencing difficulties, always talk to your provider as soon as you can; they are there to support you. They will explain what solutions may be available to you and help you to understand what they mean. Let’s explore some of the options here.
Voluntary termination
Voluntary termination is a way for you to end your agreement early by returning the vehicle to us. If you choose to do this, you must return the vehicle. After returning the vehicle, you'll be responsible for paying either half of the total amount payable under the agreement or the total amount currently due, inclusive of any arrears, whichever is greater.
If you have paid 50% or more of the total amount payable under your agreement - you must return the vehicle to us immediately. You'll still be liable for any outstanding missed payments, fees, charges, and damage beyond normal wear and tear.
If you have paid less than 50% of the total amount payable under your agreement - you must return the vehicle to us, but you'll need to pay the difference between what you have already paid and 50% of the total amount payable including any missed payments, fees, charges, and damage beyond normal wear and tear.
In addition to your VT liability, you may also need to pay:
Any damages to the vehicle over and above fair wear and tear.
Any missing services or repairs that are needed to return the vehicle to a reasonable condition.
If you choose the voluntary termination option, this will appear on your credit file. While this shouldn't negatively impact your credit score, any amount outstanding after you voluntary terminate your agreement (known as your ‘Voluntary Termination Liability’) will be reflected as arrears on your credit file, and some vehicle finance lenders may choose not to offer new finance to customers who have voluntarily terminated one or more vehicle finance agreements.
Voluntary surrender
Voluntary surrender is another way to end your agreement early by returning the vehicle to the lender. Firstly, your lender will work out a settlement figure – this is the total amount you will have to pay to end the agreement early. It will include any fees and charges your lender may have to pay when collecting the vehicle. The lender will then collect the car from you and sell it at auction. The money generated by the sale will contribute towards paying off your settlement figure.
Before the auction, your lender will give you an estimate of the value of the vehicle, based on its make, model, age, estimated mileage and condition. After the auction there are usually three outcomes:
If the car sells for less than the settlement figure, your lender will help you set up an affordable repayment plan to cover the outstanding balance.
If the car sells for exactly the settlement figure, there is nothing left to pay and you won’t need to do anything else.
Should the car sell for more than the settlement figure, you will receive the extra money.
Bear in mind that a voluntary surrender will be registered as a default on your credit file and will negatively impact your credit score.
It is also possible to exit your finance agreement without returning the car. In this scenario, your options include part exchange, private sale, and early settlement. Always make sure you discuss your options with your lender before looking to sell your car.
Requesting an early settlement
If you want to repay your loan agreement early, you’ll need to request an early settlement figure from your lender. They will be used to dealing with this request. An early settlement figure is the amount you will need to pay to clear your finance in full and will include anything outstanding you owe on the car, including interest, minus a deposit (if you paid one) and repayments already made. You are also entitled to an interest rebate under your agreement for the remaining loan period.
Once you have settled your existing car loan, you are free to apply for other kinds of finance that might be better suited to your circumstances.
Refinancing your agreement
Often, it’s possible to end an existing finance agreement by absorbing it into a new one, either with your current lender or a different finance provider altogether. This can be a good way of making your repayments more affordable, usually by securing better interest rates or a longer timeframe, or a combination of both. You could use any positive equity in your car as a deposit for a new agreement. Take a good look at all available rates to be sure you can get a better deal – depending on when you took out your original finance, interest rates may be higher than they were.
Considerations
There will likely be an early settlement fee to pay which can increase the cost of any early loan termination or refinance arrangement. Make sure you can afford any settlement fees as part of this process.
There may also be an impact on your credit score, so be sure you are aware of how this could affect you.
Communicate with your lender
As we’ve said before, good communication with your lender is crucial. Whatever finance deal you are looking for, always be transparent about your circumstances with any potential finance provider. This will help them to offer you the most suitable deal and save any complications down the line.
Thinking about taking out car finance with Oodle? Here’s how it works
