Q: Can I gift a vehicle to someone else if there is still a loan on it?
I obtained a car loan to purchase a vehicle through my bank. I am still paying off the loan. I have been letting my girlfriend use the vehicle and am now considering gifting the vehicle to her. Is this possible?
A: If you happen to be in an arrangement whereby you take title to the vehicle after final payoff, though you may give permission to your g-f to use the vehicle, she cannot take title until you pay off the loan, obtain title, and then convey title to her. Alternatively, if she has decent credit, you could ask the lienholder if they are willing to replace you with her (or her and you as co-signer), then get the vehicle registered in her name. Before giving g-f permission to use the vehicle, you must check your insurance to make sure both you and she are covered in the event of an accident. If she would be at fault in an accident, you could be held liable for the injuries or damages caused to the other party.
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A: There is more than one potential problem here. Unless you and your GF are married your insurance policy probably does not cover her when driving your car. That can be an enormous problem if she has a accident. Secondly, if the lender finds out that you are no longer driving the car--and that someone else is--they may call the loan. Third, gifting the car to her will not help; in fact it might make the other two problems worse. A better solution might be for you to pay off the car loan and then give the car to your GF--or put the title in both names? (Get separate insurance.)
1 user found this answer helpful
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