Car Loan Transfers: What Happens to Your Credit?

Transferring a car loan to another person does not automatically hurt your credit, but the way the lender handles the change can affect your score. If the lender approves a transfer that releases you from the debt, your account may be reported as paid or closed; that change can cause a temporary score shift, while a history of on-time payments generally remains on your credit report.

Check the product’s listed specifications when evaluating does transferring a car loan hurt your credit.

Missed payments are the main concern while the loan is still in your name, even if the other person has agreed to make them. A private agreement to take over payments does not release you from your obligation to the lender, so confirm the lender’s requirements and keep the loan current until the transfer or payoff is complete.

Check the product’s listed specifications when evaluating what creates the biggest risk.

The person taking over the car may need to apply for a new loan or qualify under the lender’s transfer process, which can involve a hard credit inquiry. Their new payment obligation can also affect their credit profile, while making payments on time can help them build a positive payment history.

Check the product’s listed specifications when evaluating how might the other person’s credit be affected.

Ask the lender whether it allows a loan assumption or requires the buyer to get separate financing, and get written confirmation of when your responsibility ends. Review the final loan balance and title-transfer requirements, then monitor your credit reports to make sure the original account is reported accurately; our A Clear Guide to Transferring a Car Loan: Step-by-Step eBook on How to Transfer a Car Loan to Another Person is a companion to our car loan transfer guide as you plan those steps.

Check the product’s listed specifications when evaluating what should you do before handing over the car.