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How do I let someone take over my car payments?
I want to sell my car to my friend. They said they would take over my car payments for me. How would they take over my payments?
Emily Maracle · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
Although this arrangement seems mutually beneficial, your friend can’t legally take over your car payments.
When you get a loan from a bank or dealership, the lender bases your interest rate and loan terms on your personal information. Loan interest rates and terms are legally binding and unique to you. If your friend wanted to get a loan, there’s no guarantee they would get the same rates or terms as you.
If you want to sell the car to them, you would have to sell it for enough to pay off your loan or arrange an agreement. For example, you still own the car, but your friend pays you monthly to cover your loan payment. You’re still responsible for your loan, payments, and
car insurance
, but they could drive the vehicle. The only requirement is that you add them as an additional driver on your car insurance policy.Depending on your friend’s
driving record
, this could be more or less expensive than what you’re currently paying for insurance.Since this is a complicated situation, trust is essential. If they get into an accident and need to file a claim, you will see an increase in your insurance rates and you may still end up owing money on your loan if the car is totaled.
If anything, consider adding
gap insurance
or loan/lease coverage to your car insurance. If your friend totals the car, your insurance would pay the difference between the vehicle’s actual cash value and your loan.If you don’t have this coverage already, shop around with
Jerry
. Jerry is an app and one-stop car insurance broker that helps you find the best rates and coverages from top providers, ensuring your vehicle has the best protection possible.View full answer
- Gregory R.
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Jerry partners with more than 50 insurance companies, but our content is independently researched, written, and fact-checked by our team of editors and agents. We aren’t paid for reviews or other content.
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