Refinancing a car loan is a good option if you want to lower your monthly payments or add a cosigner — or another person who is responsible for adhering to the contract — to the loan. But can you add someone to a car loan without refinancing? You might want to add someone to your car loan for a few reasons. For example, if your spouse has poor credit, you may want to add them to your loan so you can help improve their credit score.
Discover everything you need to know about adding someone to your car loan without refinancing by filling out the form below:
Perhaps you want someone else to take over your car payments, but you want to benefit from the continued on-time payments they make each month to improve your own credit score. If you’re a parent, you may want to add your child to your car loan to help them start building credit or teach them financial responsibility. Regardless of the reason, know what your options are if you want to add someone to your car loan.
Can You Add Someone to a Car Loan without Refinancing?
Unfortunately, once you sign an auto loan agreement, you can’t add someone to that loan without refinancing. If you think you might want someone else to be on your loan, plan carefully, and put them on the contract right away. Otherwise, you’ll have to refinance to add their name to your car loan. However, you may have the option of adding someone to your car title even if you still owe money on your loan. This isn’t always an option, though, and adding someone to your car title won’t help them build or repair their credit.
Not all lenders allow you to add someone to the car’s title while you still owe on it. Therefore, check with your lender if you want to do this. If you decide to refinance, you can add someone’s name to the loan, which also allows their name to be on the car’s title.
Alternatives to Adding Someone to a Car Loan without Refinancing
Although you can’t add someone to a car loan without refinancing, you may have some alternative options for getting another name on your car loan. Consider the following methods if you want someone else’s name on your car loan:
Trade the Vehicle In
You can trade in a vehicle with a loan, and this is one alternative to getting another name on your car loan agreement. When you trade in your car, the dealership pays off your old loan and sets you up with a new one. Borrowers can choose to add a friend, spouse, or child to their new loan for the new vehicle. Since you’re paying off the old loan and getting a new one, you can add someone to your car loan during the trade-in process.
This is a good option only if you’re willing to get rid of your current vehicle to add someone to your loan. If you really like your car, you probably don’t want to trade it in, so refinancing your car loan may be a better option. It lets you keep your car and add another person to your loan.
Transfer the Loan
Transferring your car loan to another party may be a way to get their name on the loan. CapitalOne states that transferring a loan to another party isn’t easy, and not all lenders are willing to allow this. If you want to transfer your car loan, the person who wants to assume the loan will have to fill out an application. This means that the lender will check their credit score and other factors to determine their creditworthiness.
If the lender decides they can make the payments and take over the loan, their name will be on it. However, yours won’t be. This option is best for someone who wants to get out of their car loan altogether, as opposed to simply putting someone else’s name alongside theirs on the car loan contract.
Benefits of Adding Someone to a Car Loan
Adding someone to your car loan by refinancing has some benefits that make it worth the effort, including the following:
- You help someone build their credit as you make your monthly payments on time. A bank won’t care that they weren’t on the loan originally when they apply for a loan as a new borrower in the future.
- You could qualify for a better interest rate. If the person you add to your car loan has a higher credit score than you, when you refinance, you will benefit from their higher score and possibly get a lower monthly payment.
- You split up the financial burden of making the car payments. You won’t be the only one responsible for making the payments each month, as the responsibility for making payments will fall on all parties who sign the auto loan agreement.
- You might pay off your car loan sooner, depending on the agreement you have with your cosigner. If they agree to pay some of the monthly payment or if they can get better terms, you may get out of debt before you thought you would.
Downsides of Adding Someone to a Car Loan
Of course, there are some downsides you could face if you add someone to your car loan by refinancing the debt, such as the following:
- You may have a higher monthly payment if the person you add to your loan doesn’t have good credit or has a history of not making their debt payments.
- You’ll have to face the hassle of refinancing your car loan, which isn’t difficult but takes time to research and apply for.
- Your car loan will now be another person’s responsibility, so if your relationship with that individual changes for the worse, it could cause issues with making your payments or create disputes about ownership.
- You might extend the time it takes you to pay off the car if the cosigner causes the loan terms to be worse than what you can get without their name on the loan.
Consider the pros and cons while remembering your personal situation to decide whether it’s worth refinancing to add someone to your loan.
Frequently Asked Questions (FAQs) about Car Loans
Use the following answers to FAQs about car loans to help you understand more about them before you buy a car or add someone to your car loan agreement:
Can I Remove Someone from a Car Loan without Refinancing?
If you had a cosigner when you got your auto loan, the only way to remove them is to refinance. Just like with adding someone to your car loan, removing them isn’t possible once you sign the contract. Make sure that you choose someone responsible and trustworthy before adding a name to your car loan, as it can be difficult to remove them without refinancing before you pay the loan in full.
Can Someone Else Insure My Car If I Have a Loan?
Most insurance companies want the person who owns a vehicle to also insure it, as the car’s owner has more of an interest in continually maintaining the car and ensuring it is undamaged. If someone else wants to insure your vehicle, they might be able to do so if they prove to the insurance provider that they have possession of the vehicle and that it stays at their residence. Because insurance companies are suspicious of fraud when someone besides a vehicle’s owner wants to take out a policy, it is challenging for someone else to purchase an insurance policy for your car.
Can I Get a Car Loan If I Don’t Have a Job?
You can get a car loan if you’re unemployed, but it might be more difficult. A lender wants to see that you’re financially stable and have a good income that allows you to make your car payment each month. If you have a large down payment and a high credit score, they may consider providing you with a car loan even though you’re unemployed. Having an upcoming new job or being unemployed for a short time also makes it easier to qualify for a car loan during your unemployment.
Can I Buy a Car with No Credit and No Cosigner?
It is challenging for drivers who have no credit to get financing for a vehicle. Having a cosigner may help, but if this isn’t an option, you may still be able to get a car loan. Subprime lenders loan to you even if your credit score is below 580, which is a low rating, per the credit rating company Experian. You can also make a large down payment to reduce the amount you need to borrow or ask a friend or family member to lend you money.
Reducing your debt-to-income ratio before applying for a loan looks good to lenders. Therefore, pay extra on your credit card bills if you can. Also, ensure you don’t acquire any new debt for at least six months before applying for financing.
Refinancing your car loan is the best way to add someone else to your agreement. If you’re interested in putting another name on your car loan, you may want to seek refinancing options to see whether you can get a better deal and add another person to the agreement.
Hearst Autos Research, produced independently of the Car and Driver editorial staff, provides articles about cars and the automotive industry to help readers make informed purchasing choices.
Finance & Insurance Editor
Elizabeth Rivelli is a freelance writer with more than three years of experience covering personal finance and insurance. She has extensive knowledge of various insurance lines, including car insurance and property insurance. Her byline has appeared in dozens of online finance publications, like The Balance, Investopedia, Reviews.com, Forbes, and Bankrate.