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What happens to a car loan if someone dies?
I was at my local bar and grill the other night with a few regulars I’ve known for years. We somehow managed to get on the subject of car loans. Not the most riveting topic, but we quickly moved on after agreeing none of us know what happens to a loan once you die. So I’m still curious, what happens to a car loan if someone dies?
Jack Walsh · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
That’s undoubtedly an interesting topic to land on, but nevertheless, it’s a great question!
If someone with a
car loan
dies, the loan is not forgiven. To satisfy the lender, either a relative will need to keep the car and take over the loan, or they’ll have to pay it off. If you want to find out more about what can happen with your loan specifically, you should read through the death clause in your loan agreement. To prepare for the unfortunate situation, you can outline your wishes in your will or estate plan. However, if you have no preference, you can leave the decision to the executor of your will and estate.
Typically, the debt is settled by:
- Using the funds from your estate to pay off the loan before selling or giving the car as an inheritance.
- Having a family member keep the vehicle and take over the loan.
- Letting the lender repossess the vehicle.
Hopefully, this answers your question, and you can share your newfound knowledge with the regulars at your local bar and grill! Another bit of knowledge you can share is that the average
Jerry
user saves $879 a year on car insurance
by collecting personalized quotes from top insurance providers in seconds. View full answer
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