How Does Taking Over Car Payments Work?

Pros and cons

Taking over another persons car payments can be accomplished, but it is not as simple as people would think. Taking over car payments involves assuming the monthly payment, and other responsibilities until the end of the payment term. While there are positive aspects to this, such as getting lower interest rates, fewer payments, the ability to build credit faster, avoiding the down payment and fees associated with a new loan or lease; there are negative aspects as well. You must consider the reason why the current owner wants someone to take over payments and doesn't end the lease or sell the car outright. This could mean that the payments are more than the value of the car. There may be mechanical issues with the vehicle which neither the current owner nor the financing agency wishes to tend to.

Steps Involved

Taking over someone's car payments involves more than just the two people who are moving the responsibility. The most common third party will be either a leasing company or a financial institution. They will want to make sure you can handle the payment and schedule. There is also the insurance company, who will want to know that the car is worth purchasing and will check your credit rating as well as the history of the car.

Needed Items

To take over car payments you will need to discuss the situation with all of the parties affected. You will need to have a meeting with the bank or credit union holding the loan or lease. The institution usually needs paperwork, your credit history, your earning history and ability to pay the installments, and employment history. The loan or lease may be re-written so that you are the primary person responsible for the agreement. You may get different terms and interest rates, depending on how your financial situation compares to the previous owner.

Precautions

To avoid any unseen problems after the deal is settled, take the car to a mechanic before signing papers. Questions concerning engine condition, safety and the amount and level of needed repairs must be answered first. If the car is old, expect some repairs. You will also want to figure out the costs of the car. You should watch for increasing maintenance and incidental costs which could increase your financial burden. You should also write out a contract between the seller of the car and yourself. Have a clear understanding of what the transaction will handle, how it will be carried out, and in what time. The agreement must state that the seller is terminating all rights and ownership of the car unless there is a default in payments. Get this contract notarized and have copies made for everyone involved from the primary parties involved to the lenders and insurance agents.