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Information on car loan transfer - The Bills.com Blog
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Information on car loan transfer
Monday, Oct 29, 2007
Question: I have a car loan thru my bank..the amount that i have left to pay is about 16,000 the trade in value for my car is 13,000 if i get a new car for about 28,000 and used my car as a trade in making the new car about 15,000 could i just switch the cars but keep the same loan and apply the remaining balance of my loan to the new car?..is this possible and if so would there be any penialties or anything negative like that or what would normally happen in this case..
Answer: In order to accomplish what you are trying to do, you would most likely have to work with both, the lender of your existing vehicle as well as the one who will be funding your new loan. When you trade in your car, the person or entity buying the car will be paying off the existing loan. In case if the sale or trade in value is below the amount of your existing loan, as it is in your case, the negative equity that you have will be added
to your new loan. So in your case the $3000 deficit would be added on top of the $15,000 that you are borrowing for your new car. Here is the math in simple terms:
Cost of new car $28000
Less trade in value - $13000
Amount of new loan $15000
Add deficit for old loan + $ 3000
---------------------------------
New loan total = $18000
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Net net, you will be closing the existing loan for your old car and opening a new one for your new car. As far as the penalties, prepayment terms vary from lender to lender so you will need to
Cost of new car $28000
Less trade in value - $13000
Amount of new loan $15000
Add deficit for old loan + $ 3000
---------------------------------
New loan total = $18000
---------------------------------
Net net, you will be closing the existing loan for your old car and opening a new one for your new car. As far as the penalties, prepayment terms vary from lender to lender so you will need to
call your existing loan provider to get details on the prepayment penalties if any. In case there is a penalty then you will have to factor in that cost as well to your new loan. If you are looking for new loan offers Bills.com makes it easy to get quotes from different lenders. If you fill in your information at https://www.bills.com/autoloan/loan/ matching lenders will then contact you. You can then discuss your particular situation with them and see if they are willing to work with you. Make sure you shop around to find the lowest rate.
I hope the information provided helps you Find. Learn. Save!
Best,
Bill
www.bills.com
I hope the information provided helps you Find. Learn. Save!
Best,
Bill
www.bills.com
Also, make sure to get a free financial health check-up with Bills IQ!
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1. Posted by mayra on Monday 26th January 2009 15:53
How are you, HELP!!! my father has a car loan and recently passed away, how can i transfer this loan to my name? will this be like a refi? legally can it be transfered to my name automatically?
2. Posted by Bill on Monday 26th January 2009 16:43
It will not be an automatic transfer. The car will be passed to your father's estate who inturn will decide who gets his assets based on what his will states or who the legal heir is.