How To Take Over Car Payments? [WHAT YOU NEED TO KNOW]

When buying a used car, you may find yourself taking over car payments. But how do you go about doing this?

The owner of the auto will have to confirm with the lender that this is an option. Then, you will need to prove to the lender that you are able to make the payments. Finally, you can complete the sale and paperwork. The process will likely involve negotiations between you, the buyer, and their lender.

Take a closer look at how to take over car payments, as well as everything you need to know about doing so.

How Do You Take Over Payments on a Car?

Many people choose to sell their car even if they still owe money on it. In this case, the buyer may agree to take over the payments as part of the sale. This is common, but you need to understand how it works and be sure it is the right decision. You should also familiarize yourself with some alternatives.

How To Take Over Car Loan Payments

When you take over the car loan payments, you will have to work with both the current owner/seller of the auto and their lender. The process will involve the following steps, some of which you will handle and some of which will be handled by the seller.

Confirm It's An Option

The owner has to talk to their lender to confirm that they have the option of having someone take over the loan. Some loan agreements don't allow for this or will charge hefty fees for doing so. In that case, you and the owner will have to come to another agreement, or you may look for another auto to buy.

Prepare Like You're Applying For A Loan

Once you know it is an option, you will have to gather documentation to show the lender that you can make on-time payments. This will typically include gathering proof of income, pay stubs, or tax returns. You should also check your credit score.

Meet With The Owner And Look At The Contract

Now, you are ready to meet with the current auto owner to inspect the car and see the contract. Remember that you will be taking over the contract, so all its terms will apply to you. Ask questions if you aren't clear, and feel free to walk away if you don't like the terms. But remember that the lender may offer you slightly different terms, especially if your credit score, income, or debt-to-income ratio are different from those of the seller.

Negotiate With All Parties

You, the seller, and the lender will have to negotiate to come up with a new deal. This will include the terms of your loan with the lender, as well as the amount you pay the seller.

Sign The Paperwork

At this point, all that's left is to sign the paperwork, and you will have taken over the loan.

Take Over Car Payments Craigslist

If you are looking to buy a used car where you take over the loan payments, Craigslist is an excellent source. Depending on where you live, you will easily find dozens of listings for this situation. Just remember to be extra cautious when taking over a loan or buying a car from someone you don't know.

Car Lease Take Over Payments

Just like you can buy a used car and take over the original loan payments, you can take over a lease for an auto. Sometimes, this is even easier than taking over an auto loan, as it will be a lower amount.

Whether this is an option will depend on the lease contract. If possible, expect the steps to be very similar to taking over a traditional auto loan.

Car Dealers That Take Over Payments

Many car dealers will take over your car payments for you. This can be an option if you want to trade in your auto and get a new one. In most cases, the dealership would take over the loan and then just pay it off.

The benefit of selling to a car dealership that will take over the payments is that they will guide you through all the paperwork. You will also be able to easily buy a car from them simultaneously. The downside is that the dealership will likely charge you for convenience. Even so, this is frequently worth it. You will have to evaluate the options.

How To Take Over Car Payments When Someone Dies

The above situations involve taking over car payments when you buy a used car, but you may find yourself with similar questions if the auto's owner dies. In this case, you have a few options.

What Happens To The Loan When Someone Dies?

If a person with an auto loan dies, their estate is responsible for paying the lender. The estate refers to all assets owned by the deceased, excluding those held in trust. So, the executor of the estate could use the estate's funds to pay off the loan, and the estate would own the car.

If the estate can't pay for the car and no one wants to take over the loan payments, the lender may simply repossess the auto. This could become more complicated if the person who owned the car willed it to someone, and the person who receives it can't afford to make the loan payments.

What About Cosigned Or Joint Loans?

The situation is a little different if you have a joint loan with someone who dies or cosigned a loan for someone who dies. In either of these situations, you would automatically become responsible for paying the loan.

Start By Sending The Lender A Death Certificate

Regardless of the situation with the car loan or your plans for it, you should send the lender a death certificate, so they know that the owner has died. In many cases, the lender may automatically send you the relevant paperwork after receiving it. In other cases, you will have to ask the lender about their specific process.

Should You Make Payments As Soon As The Owner Dies?

If you weren't on a joint loan or a cosigner on the auto loan, you have no responsibility to make loan payments after someone dies. However, it may be in your best interest to keep doing so, especially if you plan on taking over or paying off the loan.

Technically, the estate is responsible for paying the auto loan. But the probate process can take a long time, so leaving it to the estate could lead to missed payments.

But there is a very important caveat here—never make payments on the car if the loan isn't in your name and you aren't sure you are getting it. What happens if you aren't approved to take over the loan? Or what if the estate decides to sell the car before you get it? You would have wasted money.

Refinance The Loan To Take Over It

Assuming that the estate can't afford to pay off the auto loan and you decide to take over payments, you will do so by refinancing it or just taking over the loan. Refinancing can be a good option if you could get better terms than the previous owner could. Some lenders may require you to refinance, while others will let you just take over the loan or issue a new one.

Alternatives To Taking Over Car Loan Payments

All of the above advice is helpful if you want to take over the car loan payments when you buy a used car. But what if you want to pay for the car in cash? Or what if you would rather get a new loan for the auto? The options vary slightly depending on the situation, but the following are some possibilities.

You Want To Pay In Cash – And Have Enough Cash

If you want to pay for your used car in cash and have enough cash to do so, this is great. You would tell the seller that this is the case. The seller would have to get the payoff amount from the lender. You would then pay the lender this much and the seller the difference between that and your agreed-upon price. (Or you may pay the lender everything, and they will give the lender the difference).

You Get A Personal Loan

You could follow similar steps to the above but get a personal loan to pay for the car. This saves you the hassle of having to switch the loan to your name. But be aware that rates for personal loans are higher than those for auto loans.

You'd Rather Get A Separate Auto Loan

Maybe you do want an auto loan but don't want to take over someone else's. In this case, your best option is to approach a lender to get an auto loan for a used car and just buy a used auto from a dealership.

Conclusion

To take over payments on an auto loan, you will have to prove to the lender that you can afford to do so. This will typically involve a credit check and proof of income. Remember that taking over loan payments is just one way to buy a used car. Always weigh all your options before deciding what to do.