Car ownership often comes with unexpected twists. Whether you’re relocating, upgrading, or simply looking to lighten your financial load, transferring your car loan to someone else may seem like a smart move. But how exactly do you do it in Canada?
Limited Time Automotive Amazon DealsIn this blog, we’ll walk you through the full process of transferring a car loan in Canada, from lender approval to legal steps. Plus, we’ll explore when a transfer makes sense and what pitfalls to avoid.
The short answer is: sometimes. Not all lenders allow a car loan to be transferred to another person. If they do, there are often strict conditions and approval criteria that must be met.
Limited Time Automotive Amazon DealsGenerally, car loan transfers involve a loan assumption, meaning the new borrower agrees to take over the remaining balance and loan terms. The lender must review the new borrower’s creditworthiness before anything is finalized.
You might want to transfer your auto loan if:
But there are also risks. If done incorrectly, you could remain legally responsible for the loan even after the car is in someone else’s hands.
Start by reviewing the original loan contract. Some lenders prohibit loan assumptions altogether, while others allow them under strict conditions. Look for clauses like “non-transferable,” “assignment,” or “loan assumption.”
If you’re unsure, contact your lender directly and ask.
Next, reach out to your auto financing company or bank. Ask them if you can transfer the loan, and what the process involves. They’ll likely require:
Some lenders may also charge a transfer fee, typically between $50–$300.
The person who’s taking over your loan must meet the lender’s eligibility criteria. This means they need:
If the person doesn’t qualify alone, the lender might suggest a co-signer or deny the application.
Once the lender approves the new borrower, they’ll prepare documents that both parties need to sign. This includes:
You may need to visit a local branch of your bank or dealership to complete the paperwork in person.
The vehicle’s ownership and registration must be transferred to the new borrower through your provincial motor vehicle licensing agency (e.g., ServiceOntario or SAAQ in Quebec).
At the same time, the new borrower must insure the vehicle in their name. Most lenders require proof of insurance before finalizing the loan assumption.
Make sure you receive written confirmation from the lender that:
Without this, you could still be liable if the new borrower misses payments or defaults.
If your lender doesn’t allow loan transfers, you have two options:
The new person can apply for their own auto loan and use it to pay off your existing loan. Afterward, you can sell or gift the vehicle.
This method works well when the buyer has good credit and the car has positive equity.
You can sell the car, use the proceeds to pay off the loan, and transfer ownership. If the sale price is less than the remaining loan amount, you’ll need to pay the difference (called negative equity) out of pocket.
| Pros | Cons |
|---|---|
| You can offload a financial burden | Not all lenders allow it |
| Someone else takes responsibility for payments | You may need to pay transfer fees |
| It helps in case of life changes or relocation | Credit checks may disqualify the new borrower |
| Avoids penalties for early loan termination | You may remain liable if not done properly |
Transferring a car loan in Canada is definitely possible—but only if your lender permits it and the new borrower qualifies. Always protect yourself by getting everything in writing and confirming with your lender before releasing the vehicle.
If you’re in the market to upgrade your vehicle or trade it in, many Canadian dealerships like Orleans Kia, Kia 417, or Simi Valley Chrysler Dodge Jeep Ram offer flexible financing options and can help structure a new loan that fits your needs.
Need Help with Your Next Vehicle or Loan?
Visit your local dealership or speak to a financing expert today. Whether you’re transferring, trading in, or starting fresh, they can help you find the best deal—backed by professional support.
