Tuesday, March 15, 2011

How to Assume a Car Loan

If you do not have enough money to buy a used car outright, you may want to consider taking over somebody’s car payments. This requires that you legally assume the lease for the car. You would be responsible for making payments on the car for the time remaining on the lease. However, not every lease company will allow you to assume a loan. Additionally, your income and credit history may also play a role.

Step 1

Have the vehicle owner contact his or her finance company to inform it that you are planning on taking over the remainder of the car loan agreement.

Step 2

Submit an application to the leasing company. Your income to debt ratio and credit report will play an important role in the company’s decision. If you are not immediately approved to assume the loan, then offer collateral in order to gain approval.

Step 3

Inspect the loan agreement and make sure you understand all of the conditions attached to the contract. If you understand and agree to all the terms listed in the contract, then sign the agreement. The entire process can take anywhere from several days to a few weeks depending upon the company.

Step 4

Begin making payments according to the loan agreement. You will be required to continue with the original schedule of payments. You may need to start making payments immediately after signing the loan agreement.

Tips
  • Make sure you are comfortable with the monthly payment amount specified in the lease agreement.
  • It is always a good idea to consult an attorney or a personal finance professional if you have any questions.
  • If your credit is not acceptable to the loan company, then you may want to consider finding a co-signor.


Sources

Loan.com: The Basics of Assuming a Car Loan [http://www.loan.com/car-loans/the-basics-of-assuming-a-car-loan.html]

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