Legal Question in Credit and Debt Law in California

Is it illegal to have someone else take over your car and payments if the bank still is the leinholder? What if I have them get their own full coverage insurance, contract that they will pay me what I owe every month, and sign a contract saying they are responsible for any damages caused and I can repossess the car if they don't pay me?


Asked on 10/09/10, 11:41 am

3 Answers from Attorneys

You cannot give another person title to the car without paying off the loan. Other than that, you can do whatever you want, but you are at huge risk that they will just not pay you, or they won't keep up the insurance or any number of other things, and if they have an accident you could wind up with a totaled car, liability to the other driver(s) because the owner of record is liable for use of the vehicle, no insurance because they didn't pay for it, and still have to pay off your car loan. I don't know about you, but that could bankrupt me. So, up to you if you really want to do this.

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Answered on 10/14/10, 11:57 am
Steven Simons Law Office of Steven A. Simons

Tim is correct on a number of points - but I think the real issue is not whether it is illegal but wether the finance company will allow it. There is probably a clause in the sales contract that prohibits the trasfer of th evehicle to anotther. Once you relinquish control of the vehicle the finance company may take the position that its collateral is at risk and repossess the car. Did you know that if you trade the car in to a delaer, and the delaer agrees to pay it off, you are still liable on the loan until the dealer does pay it off --- days, weeks or months later. It can wreck your credit.

Or the insurance company could say why insure this third person since (s)he has no insurable interest in the car.

Many Many issues here. I would suggest that you stay away.

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Answered on 10/14/10, 5:34 pm


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