Once the Personal loans has been availed, it cannot be transferred to another person. These loans are determined based on your unique credit score and your sources of income. Some personal loans such as signature loans, require your signature and use your promise to pay as collateral. Check your Instant Personal Loan Eligibility
When you are unable to repay a personal loan, specially a signature loan, it impacts your credit score tremendously. Your lender can even send the loan to a collection agency, which turns out to be an unpleasant situation, and can make your life very stressful. They can also report you as a defaulter to the credit bureaus.
Any loan default stays on your credit score for seven years after the final payment date. To avoid long repayment tenure, a lender can include a set-off clause for the personal loan contract. This clause will allow the lender to procure your funds from a specific bank account.
When You Have a Co-Signer or Guarantor, then another person, apart from you can become liable for the remaining balance of your personal loan
Co-signers are as responsible legally for the repayment of the personal loan as the person to whom the loan is issued. Even if, the lenders would pursue the primary borrower extensively fir any defaults in repayment before contacting the guarantor, a guarantor would be still responsible for any unpaid balances.
Under any circumstance, the borrower cannot transfer the responsibility of his personal loan. Nevertheless, if there is any default on his personal loan, he makes his co-signer or guarantor liable for unpaid balances.
While you cannot transfer a personal loan to another person, other types of loans are transferable in certain situations, like Mortgages and Car Loans. However, they can be transferred to another borrower only under specific circumstances, the most important being that the new borrower should qualify for the loan. If it’s a home loan, the borrower will need to re qualify, meaning they must have a credit score equal to or greater than the original borrowers.
For a loan to be transferred to a new person, the mortgage must be assumable, where the loan agreement has the option for the debt to be transferred to another person. Moreover, a new borrower also has the alternative recourse of starting over with a brand new mortgage, which the new borrower would use to pay off your mortgage. In this way, they would then have a lower mortgage payment along with a reasonably shorter repayment period.
A car loan is comparatively easier to transfer to another person, either with the same lender or a new one. The lender may agree to transfer the loan into the new owner’s name, if the new borrower qualifies for the car loan. Though it might be that the new borrower may prefer to get a new car loan from another lender. In such a case, the new lender can pay off your car loan, thus getting a benefit of lower payments and a shorter repayment tenure.