Rs. 1 lakh – Rs. 2.50 crore
Check your pre-approved offer and other benefits
Enter mobile and OTP | Check offer | Know your exact loan terms
Used Car Ownership Made Easy
In summary
Transferring a financed car to another person requires lender involvement because the buyer cannot simply start paying EMIs on a loan that remains in your name.
- Check whether your lender permits a borrower or finance transfer
- The proposed buyer may need to satisfy income, repayment-capacity, and credit checks
- Update the Registration Certificate, hypothecation records, and insurance when ownership changes
- Do not hand over the car until loan and ownership responsibilities are formally documented
If your actual objective is to retain the car but move the outstanding loan to another lender, Bajaj Finance Car Loan Balance Transfer and Top-up is a different facility. It requires a CIBIL Score of 650 or higher, along with other applicant and vehicle conditions.
Last updated: 30 September 2026
What does transferring a car loan to another person mean?
A person-to-person car loan transfer generally refers to shifting responsibility for a financed car from the current owner-borrower to a new owner.
This commonly arises when you want to sell a car before its existing loan is fully repaid.
For example, Rohan wants to transfer his loan-linked car to his brother while the finance is still active. His brother cannot simply start paying Rohan’s EMI. The lender must first confirm whether it permits the financing responsibility to move to a new borrower and whether the proposed buyer meets its assessment requirements.
The lender may consider factors such as:
- income
- employment or business profile
- repayment capacity
- credit history
- identity and address records
- existing loan and vehicle details
Quick definition: A Credit Information Bureau (India) Limited Score (CIBIL Score) is a three-digit number, ranging from 300 to 900, that reflects your credit repayment history. Lenders use it to assess how reliably you have repaid past loans and cards.
The finance agreement remains between the existing borrower and lender until the lender approves a change or the original loan is settled.
Depending on the lender’s policy, the process may involve:
- approval of the proposed new borrower
- settlement or restructuring of the existing loan
- lender consent for the vehicle ownership transfer
- changes to hypothecation or finance records
- transfer of the Registration Certificate (RC)
- transfer or fresh issuance of motor insurance
The exact route depends on your loan agreement, lender, registering authority, and financing arrangement.
Can you transfer an active car loan to another person?
It may be possible, but it is not automatic.
The first step is to ask your existing lender whether it permits another borrower to take over the financed vehicle and outstanding liability.
The lender may assess the proposed buyer before giving consent. This can include checking:
- income
- employment or business profile
- credit history
- repayment capacity
- identity and address records
- vehicle and existing loan details
If the lender does not permit a borrower change, you may need to repay or foreclose the existing loan before completing the sale.
Do not assume that an agreement between you and the buyer changes the lender’s legal records.
Pro tip: Do not transfer possession based only on the buyer’s promise to continue your EMIs. Until the lender and vehicle records are updated, the existing borrower can remain responsible for the loan.
How do you transfer a financed car to another person?
The process should begin with the lender and then move through buyer verification, loan settlement or transfer, ownership records, and insurance.
1. Check your existing loan agreement
Review your loan documents before agreeing to sell the car.
Look for provisions related to:
- sale of the financed vehicle
- transfer of ownership
- borrower substitution
- foreclosure
- lender consent
- hypothecation
- applicable transfer or closure charges
If the terms are unclear, contact the lender before accepting payment from the buyer.
This tells you whether the existing finance can be transferred or must first be closed.
2. Inform the lender about the proposed transfer
Tell the lender that you intend to sell the financed car to another person.
Ask what process applies in your case.
The lender may require details about:
- the proposed buyer
- current outstanding loan amount
- existing repayment status
- vehicle
- proposed ownership transfer
Do not treat the sale and loan as two unrelated transactions. The financier has an interest in the vehicle while the loan remains active.
3. Check whether the buyer qualifies
If the lender permits the financing arrangement to move to another borrower, the proposed buyer will usually need to undergo an assessment.
The lender may ask for:
- identity proof
- address proof
- income documents
- bank statements
- employment or business information
- credit information
A buyer willing to purchase the car is not automatically eligible to take over the financing.
Quick definition: A Credit Information Bureau (India) Limited Score (CIBIL Score) is a three-digit number, ranging from 300 to 900, that reflects your credit repayment history. Lenders use it to assess how reliably you have repaid past loans and cards.
The lender can consider the buyer’s credit profile together with income and repayment capacity before approving any new financing arrangement.
4. Confirm the outstanding loan and settlement
Obtain the current outstanding amount from the lender.
You and the buyer should clearly understand:
- outstanding principal
- applicable foreclosure or transfer amount
- pending EMI or charges, if any
- amount payable by the buyer to you
- amount, if any, payable directly to the lender
Avoid calculating the sale settlement only from the car’s agreed purchase price.
For example, if you agree to sell a car for Rs. 8 lakh while Rs. 5 lakh remains payable to the lender, the transaction must account separately for the lender’s settlement and the remaining value payable to you.
The actual process depends on the lender’s approved arrangement.
5. Complete the loan-related paperwork
Follow the documentation process specified by the lender.
Depending on whether the old finance is transferred, replaced, or closed, you may need documents relating to:
- existing loan
- lender consent
- outstanding amount
- buyer identification
- buyer income
- vehicle registration
- insurance
- finance or hypothecation records
Do not rely on a private sale agreement alone to establish that you are no longer responsible for the loan.
Keep copies of the lender’s confirmation and any loan-closure or revised-finance documents.
6. Transfer the vehicle registration
The Registration Certificate should be updated when vehicle ownership changes.
The Ministry of Road Transport and Highways’ VAHAN process provides a Transfer of Ownership service. The seller initiates the ownership-transfer process, after which the buyer completes the required steps.
For a vehicle held under a hire-purchase, lease, or hypothecation arrangement, the financier’s involvement can also be relevant to the ownership change.
You may need to submit applicable transfer forms, supporting documents, and fees according to the registering authority’s requirements.
Pro tip: Do not consider the sale complete merely because the buyer has taken possession of the car. Check that the ownership change is reflected in the Registration Certificate.
How does hypothecation affect the transfer?
Hypothecation records that the vehicle is financed and that the lender has an interest in it.
If you first repay and close the existing car loan, the hypothecation may need to be terminated as part of the applicable vehicle-registration process.
The Parivahan process provides a separate Hypothecation Termination service for removing the financier’s entry after the finance agreement has ended.
If the vehicle remains financed under a lender-approved arrangement, the financier may instead need to consent to the applicable ownership and finance-record changes.
The correct route depends on how the lender structures the transaction.
Do you need to transfer the car insurance?
Yes. When ownership of the vehicle changes, the insurance records also need to reflect the new owner.
Inform the insurer about the sale and follow its process for transferring or updating the policy.
The buyer should ensure that:
- the policyholder details are correct
- vehicle details match the Registration Certificate
- applicable insurance documents are updated
- policy coverage remains valid through the ownership-transfer process
Do not assume that updating the RC automatically changes the insurance policy.
The buyer should confirm the final policy records directly with the insurer.
What documents may be required?
The exact documents depend on your lender, insurer, registering authority, and transfer route.
You may need documents such as:
Existing borrower and loan documents
- identity and address proof
- current loan account details
- outstanding loan statement
- lender consent or closure documents, as applicable
- Permanent Account Number (PAN) card, where required
Buyer documents
- identity proof
- address proof
- income proof
- bank statements
- employment or business records
- documents required for the lender’s credit assessment
Vehicle documents
- Registration Certificate
- valid insurance certificate
- applicable ownership-transfer forms
- hypothecation-related documents, where required
- No Objection Certificate (NOC), where applicable
Check the exact requirement with the relevant lender and registering authority before submitting the transfer.
What costs should you check before transferring?
A person-to-person transfer can involve costs beyond the agreed sale price.
These may include:
- loan foreclosure or settlement charges
- lender transfer or processing charges, where applicable
- Registration Certificate ownership-transfer fee
- hypothecation-related charges
- applicable state or registering-authority fees
- insurance-transfer or policy-related costs
Ask for the applicable figures before finalising the sale.
This helps both parties understand the amount that goes towards closing or restructuring the finance and the amount that forms part of the vehicle sale.
What if the lender does not allow the loan transfer?
You may need to close the existing car loan before transferring the car.
A common sequence can then be:
- Obtain the outstanding or foreclosure amount.
- Settle the existing loan according to the lender’s process.
- Collect the applicable closure and hypothecation documents.
- Complete the required hypothecation update or termination.
- Transfer the vehicle ownership to the buyer.
- Update the insurance records.
The buyer can separately arrange their own financing if required.
This is different from simply replacing your name with the buyer’s name on the original loan.
Pro tip: If borrower substitution is unavailable, compare the car’s agreed sale price with your outstanding loan before proceeding. You may need to contribute your own funds if the sale proceeds are lower than the amount required to close the loan.
How is this different from a car loan balance transfer?
A transfer to another person and a transfer to another lender solve different problems.
| Point | Transfer to another person | Car loan balance transfer |
| What changes? | Vehicle owner and potentially borrower | Lender |
| Typical reason | Selling a financed car | Revising existing loan terms |
| Buyer involved | Yes | No |
| Ownership transfer | Usually required | Vehicle ownership normally remains with you |
| RC change | Required when ownership changes | Usually not an ownership change |
| Loan assessment | Proposed buyer may need assessment | Existing borrower is reassessed |
| Top-up | Depends on arrangement | Can be available with eligible products |
If you want to keep your car but move the outstanding loan to Bajaj Finance, check the Car Loan Balance Transfer and Top-up eligibility criteria.
For this facility, Bajaj Finance requires a CIBIL Score of 650 or higher, along with other applicant and vehicle conditions.
What should you confirm before handing over the car?
Before giving possession to the buyer, confirm that the financing and ownership process is properly documented.
Check that:
- your lender knows about the proposed sale
- any required lender approval has been received
- the outstanding loan amount is confirmed
- payment responsibilities are documented
- the buyer has completed any required credit assessment
- applicable loan documents are signed
- RC transfer has been initiated or completed as required
- hypothecation records are being handled correctly
- insurance transfer is arranged
- you retain copies of important acknowledgements and documents
Do not rely solely on an informal arrangement in which the buyer sends you money each month to pay the EMI.
What do our customers say about us
Amit Chauhan
Reviewed on 04 Mar 2025
Smooth and transparent used car loan process. The interest rates were competitive, and the documentation was minimal. The team guided me clearly at every step, making my used car purchase simple and stress-free. Highly recommended for quick approvals.
Ashwin Kamble
Reviewed on 24 Feb 2025
Clear guidance, quick approval, and flexible repayment options made buying my used car easier than expected. The team handled everything professionally. Very satisfied and would definitely recommend their used car loan.
Rohit Sharma
Reviewed on 12 Apr 2025
I had a great experience while applying for my used car loan. The process was quick, and the interest rate helped me manage the purchase better. Customer service was helpful throughout. Highly recommended for a smooth used car financing experience.
Ajay Kulkarni
Reviewed on 08 Dec 2024
My used car loan experience was simple and hassle-free. The approval was quick, the repayment options were flexible, and the team explained every step clearly. It helped me buy my preferred used car without financial stress. I would surely recommend it.
Related articles
Used Car Loan: Everything You Need To Know
Read More
Should You Opt for a Used Car Loan to Purchase Your Dream Car
Read More
How to choose the right tenure for your used car loan
Read More
Should You Opt for a Used Car Loan to Purchase Your Dream Car
Read More
Bajaj Finance app for all your financial needs and goals
Trusted by 50 million+ customers in India, Bajaj Finance App is a one-stop solution for all your financial needs and goals.
You can use the Bajaj Finance App to:
- Apply for loans online, such as Instant Personal Loan, Home Loan, Business Loan, Gold Loan, and more.
- Invest in fixed deposits and mutual funds on the app.
- Choose from multiple insurance for your health, motor and even pocket insurance, from various insurance providers.
- Pay and manage your bills and recharges using the BBPS platform. Use Bajaj Pay and Bajaj Wallet for quick and simple money transfers and transactions.
- Apply for Insta EMI Card and get a pre-qualified limit on the app. Explore over 1 million products on the app that can be purchased from a partner store on Easy EMIs.
- Shop from over 100+ brand partners that offer a diverse range of products and services.
- Use specialised tools like EMI calculators, SIP Calculators
- Check your credit score, download loan statements and even get quick customer support—all on the app.
Download the Bajaj Finance App today and experience the convenience of managing your finances on one app.
Frequently asked questions
Overview
Repayment
Can I transfer my existing car loan directly to the buyer?
Possibly, but only if your lender permits the applicable borrower or finance transfer and approves the proposed buyer. A private agreement between you and the buyer does not by itself change the loan contract. The lender may assess the buyer’s income, credit profile, and repayment capacity before approving a new arrangement. If such a transfer is unavailable, you may need to close the existing loan before transferring vehicle ownership.
Can I sell a car while a loan is still active?
You can plan to sell a financed car, but you should involve the lender before completing the transaction. The car may still carry a hypothecation entry because of the active loan. Depending on the lender’s policy, the loan may need to be transferred through an approved arrangement or settled before ownership changes. Also ensure that the Registration Certificate and insurance are transferred correctly rather than only handing possession to the buyer.
Is transferring a car loan to a person the same as a balance transfer?
No. A person-to-person transfer relates to selling or transferring a financed vehicle and potentially changing who is responsible for the borrowing. A car loan balance transfer normally means moving the outstanding loan from one lender to another while you continue to own the car. The processes, documentation, credit assessment, and ownership implications are therefore different, even though both involve an existing car loan.
Who should pay the EMI while the transfer is being processed?
Until the lender formally changes or closes the existing loan arrangement, the original borrower should treat the repayment obligation as continuing in their name. Do not assume that the buyer’s promise to make an EMI removes your responsibility. Missed payments during the transition can affect the existing loan account and credit history. Confirm the effective date of any lender-approved change and keep the loan current until that process is complete.
What happens if the buyer does not qualify for the loan transfer?
If the lender does not approve the buyer, the existing loan usually cannot simply be shifted to that person. You may need to continue with the loan, find another eligible buyer, or repay and close the outstanding finance before completing the vehicle sale. The buyer may also arrange separate financing. Do not transfer the car informally while the loan continues solely in your name, as the repayment obligation can remain with you.
Disclaimer
1. Bajaj Finance Limited (“BFL”) is a Non-Banking Finance Company (NBFC) and Prepaid Payment Instrument Issuer offering financial services viz., loans, deposits, Bajaj Pay Wallet, Bajaj Pay UPI, bill payments and third-party wealth management products. The details mentioned in the respective product/ service document shall prevail in case of any inconsistency with respect to the information referring to BFL products and services on this page.
2. All other information, such as, the images, facts, statistics etc. (“information”) that are in addition to the details mentioned in the BFL’s product/ service document and which are being displayed on this page only depicts the summary of the information sourced from the public domain. The said information is neither owned by BFL nor it is to the exclusive knowledge of BFL. There may be inadvertent inaccuracies or typographical errors or delays in updating the said information. Hence, users are advised to independently exercise diligence by verifying complete information, including by consulting experts, if any. Users shall be the sole owner of the decision taken, if any, about suitability of the same.