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What happens to a car loan when the owner dies?
My neighbor passed away a little over a week ago. I’ve been helping his son clear out the house. It appears my neighbor still has a car loan and his son isn’t sure what to do. What happens to a car loan when the owner dies?
Jack Walsh · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
I’m sorry to hear about the loss. It’s very kind of you to help the son however you can.
When the owner of a car with a loan dies, the
car loan
is not automatically forgiven and will have to be paid off or taken over by a relative. Ideally, your neighbor would have outlined his wishes in his will or estate plan, but if not, the executor of the will and estate will decide how to proceed. There are a few ways to settle the debt, but it is most often done by:
- Having a relative take over the loan payments
- Letting the lender repossess the vehicle
- Using funds from the estate to pay off the loan
You sound like a very thoughtful neighbor, and you can help the son out a bit more by reminding him to cancel his father’s current
car insurance
. If he plans to keep the vehicle, you should recommend Jerry
to find a new policy. Jerry is an insurance comparison app that shops for low prices with over 50 different insurance companies for free and takes the stress out of purchasing a new policy by handling all the phone calls and paperwork for you. You will get quotes in seconds, can make changes at any time, and if you ever have any questions, agents are just a text away.
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- Gregory R.
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