Legal Question in Business Law in Massachusetts

Re: Assumption of an auto loan without refinancing auto

It's possible but hard. How well do you know her?

In whose name do you expect the registration to be?

Some things to think about:

a) If you don't pay off the loan, you stay

responsible to the bank no matter what happens.

If she stops paying, or if she smashes up the car

and especially if it is not insured, you still owe the bank the

balance and have only recourse to sue her.

If she routinely drives your car under your insurance, an insurance

company would end up not covering the accident.

You could even be accused of fraud and potentially be jailed(!).

An accident or even just

speeding tickets would raise your insurance rates, potentially by quite a bit.

Parking tickets on the car would be your responsibility and you wouldn't be able to renew your

driver's license until they were cleared up, as would bills from your

town for the excise tax.

b) If she fails to make a payment, realistically

you can't afford to repossess anyway since that

is too expensive a process to do unless you're set up

for it and have it down to a routine. (But I put it

into the agreement anyway for the threat effect.)

c) Your agreement with the bank could allow them to

demand it be paid up upon your 'sale' to her; that's called

an acceleration clause, though sometimes it's just labelled

default.

d) If she doesn't make an insurance payment, the bank

may put on forced insurance (expensive) and charge you for it.

e) If you were thinking of staying the registered

owner, if she has an accident, though theoretically you should be

off the hook, the victim may cause you to have to defend yourself.

f) If there's a hit-and-run with the vehicle, the law PRESUMES that

you are liable; the burden of proof is upon you to show

that the vehicle was not being operated on your behalf and that you

are not liable.

If you can afford to pay off the loan, and then you want to offer

her a loan equal to the balance of your loan with the same terms,

that works better. Contact me directly to draft a contract

between you.