Experts say not to apply for credit before buying a house. But does this apply to car loan refinancing? Refinancing your car can help you snag a lower interest rate and a lower monthly auto loan payment. But depending on your credit history, refinancing your car right before buying a…
When any relationship ends or changes, it can be a difficult transition — especially if there are finances involved. Changing and separating your financial situation can be a daunting task. Many people don’t know where to start, and once they do, it can sometimes seem like a complex process. Some tasks are easier than others (i.e. un-joining a bank account) and some are more difficult (i.e. joint asset loans, businesses, joint debt).
Since cars are on the list of more complex financial matters to separate (it’s not that bad, we promise), and because we’re experts on auto loans — handling these situations every day, we’ll help give you the tools to make this transition an easy one.
How Do Title Transfers Work?
If you refinance with us, you don’t need to worry about the title work. However, if you’re curious or if you’re doing this process on your own, here’s what happens.
If Your Car Is Paid Off
If your car is paid off, you are not on a lease, and you’d like to remove someone off of your vehicle’s title, you’ll have to work with your state’s DMV.
Because the DMV a government entity guided by the law, they’ll have a straightforward list of requirements and a specific process for submitting such requirements. Though there are certainly differences in rules, there are also general consistencies across all 50 states’ DMV title transfer process.
First and foremost, no matter who you’re removing, the wording on the title is important. Your title will specify whether the vehicle is owned by you “and” the other person, or by you “or” the other person. It might seem like a subtle difference, but it does tend to change a couple of steps in the title transfer process.
This “and”/”or” distinction describes who is entitled to own the vehicle. If “and,” the other party needs to sign away their ownership rights. If the title change is happening as the result of a finalized divorce, the prospective solo owner is usually able to provide the divorce decree in the place of the other party’s signature to remove them from the Title. If “or”, then either party can sign off to remove the other member; no divorce decree necessary.
Because each state’s DMV has specific rules and processes, every person seeking to obtain a title transfer in your state will receive the same general instructions, go through the same process, and use the same methodology for submission. Again, though the process and order may differ slightly, any U.S. citizen can expect to have to submit copies of their title, driver’s license, divorce decree (if applicable), pay a fee, and other requirements requested by the state.
If Your Car Is Financed
Overall, few lenders are concerned about whether or not you choose to keep someone on your loan. However, if you seek to remove them from your title, they need to be removed from your loan – and vice versa; the names on the title must match the names on the loan.
If you are committed to removing someone from your title (and therefore also your loan), you must apply for refinancing and you must be able to qualify individually for a loan on that car. Because the qualifying financial factors are likely different as an individual rather than as a pair, you could be offered a different rate or term than what you had previously.
If you can’t quality on your own but you’d still like to remove someone from your title, you will likely be asked to have a cosigner or to have a down payment.
If you are removing someone from your lien because of a divorce, the divorce decree also serves a purpose during this stage. It acts as a Power of Attorney to remove someone from the title (if your title specified “and”). It should be specific — listing the VIN, year, make, and model. Its concrete language makes is clear who is entitled to what asset, and make the refinance and title transfer process much smoother.
Once you get an approval, accept the terms, and complete the paperwork, you’ll have a new lien with your name and your new lender. We’ll take care of ensuring that your title matches; the complicated title work is on us.
Transitioning your finances toward independence doesn’t have to be a burden. We’re here to make your auto refinance easy — and save you money.