Can a loan be transferred to another person?

Why might you want to transfer a loan to someone else?

There are common life situations where you might want to hand over a loan to another person:

• Separation or divorce – When a relationship ends, you might want your ex-partner to take full responsibility for the debts you took out together, especially if they're keeping assets like the family home or car.
• Struggling to repay – If you're facing affordability issues and finding it hard to keep up with monthly payments, you might want a family member or friend to take over the loan for you.
• Death of a partner – After losing someone, you might worry about being left with joint debts or loans your partner took out.
• Helping family – You might have a loan with good interest rates that you'd like to pass on to a relative who needs to borrow money.

These are all understandable reasons, but unfortunately, loan agreements don't work this way. The good news is there are other solutions available.

Circumstances where someone else could be responsible for your loan or mortgage

While you can't transfer a loan, there are some scenarios where another person shares or takes on responsibility for your debt. In all of the below instances, the other person's responsibility comes from the original loan agreement – not from transferring an existing loan.

Joint loans and mortgages

If you took out a joint loan or mortgage with another person (like a partner or family member), you're both equally responsible for repaying the full amount. This is called "joint and several liability." If one person stops paying, the other must cover the entire debt. Even after separation, both borrowers remain legally responsible unless the amount is paid off or refinanced in one person's name only.

Guarantor loans

If someone acted as a guarantor when you took out a loan, they promised to repay the debt if you can't. The guarantor doesn't own the loan, but they become responsible for payments if you default. This responsibility can't be cancelled or transferred to someone else.

Joint loans, guarantor loans and mortgages after death

If you have a joint loan, guarantor loan or joint mortgage and one person dies, the surviving borrower or guarantor becomes responsible for the full amount outstanding.

Some mortgage products offer the option to include life insurance that pays off the loan in such an event, but without this protection, the remaining person must keep up payments or risk losing the home.

Can you transfer a car loan to someone else?

Car loans are typically non-transferable. When you finance a car, the agreement is between you and the finance company based on your credit history.

If you want to sell your car to someone else, you usually need to:

1. Pay off the outstanding loan balance
2. Transfer ownership of the car to the buyer
3. The buyer then arranges their own finance if needed

Some dealers offer "voluntary termination" if you've paid over half the loan, which lets you end the agreement early. However, this doesn't transfer the loan to another person.

How to remove yourself from a loan 

If you need to remove yourself from a loan obligation, your options include:

• Refinancing – The other person takes out a completely new loan in their name and uses it to pay off your existing loan.
• Paying it off – Clear the balance completely using savings or funds from elsewhere.
• Selling the asset – If the loan is secured against something valuable, selling it can  raise funds to clear the debt.

If you are planning any of the above, remember to check with your provider for any early repayment charges which may need to be paid. For joint loans, both borrowers remain responsible until the debt is fully repaid or one person successfully refinances in their name alone.

If you're struggling with debt

If affordability issues mean you're struggling to repay your loan, contact your lender as soon as possible. They may be able to help by:

• Reducing your monthly payments temporarily
• Giving you a payment holiday
• Extending your loan term to lower monthly costs (this could mean paying more in interest overall though)

You can seek free debt advice from organisations like StepChange, Citizens Advice, or National Debtline. These services can review your whole situation and help you find a way forward.

Don't ignore debt problems – the earlier you act, the more options you'll have available.