How to Transfer Auto Loans and Car Titles After Divorce: A Complete Guide
Finalizing a divorce brings a wave of relief and a fresh start, but it also ushers in a set of important administrative tasks that you can’t overlook. One of the most critical—and often overlooked—steps is properly transferring auto loans and car titles. If you don’t handle this correctly, you might end up stuck with unwanted debt, negative credit impacts, or even legal headaches down the line.
In this comprehensive guide, I’ll walk you through everything you need to know about transferring auto loans and vehicle titles after divorce. Drawing on real client experiences and years of helping families navigate these tricky waters, I’ll explain how to protect yourself and your credit while ensuring the process goes smoothly.
Why Transferring Auto Loans and Titles After Divorce Is Crucial
When a divorce is finalized, the division of assets and debts is legally settled. However, the practical transfer of ownership and financial responsibility doesn’t always happen automatically. This is especially true for vehicles, which often have both a title (which proves ownership) and a loan (which represents ongoing debt).
Many people assume that once the divorce decree states who gets the car, the loan and title will simply follow. Unfortunately, that’s not the case. The legal paperwork from the divorce court does not automatically update your car’s title at the DMV or remove your name from an auto loan. This means if your ex-spouse stops making payments or gets into an accident, you could still be held liable.
Neglecting these steps can lead to:
- Credit damage: If payments are missed, it reflects poorly on both parties whose names remain on the loan.
- Legal liability: If the car is involved in an accident or gets a ticket, the registered owners can be held responsible.
- Financial confusion: Without clear ownership and loan responsibility, future disputes can arise.
Step 1: How to Transfer the Vehicle Title
The first step in the process is to update the vehicle title to reflect the new ownership. The vehicle title is the official document that shows who legally owns the car.
If your divorce judgment awards you the car, you’ll need to remove your ex-spouse’s name from the title. The same applies if your ex is keeping the vehicle—you want to make sure your name is taken off the title.
This is typically done through your local Department of Motor Vehicles (DMV). The exact process can vary slightly by state, but generally, you will need to submit the following:
- The signed vehicle title showing the transfer of ownership
- A statement of facts explaining the reason for the title transfer (in this case, divorce)
- A certified copy of your divorce judgment or court order that specifies who gets the vehicle
Once submitted and approved, the DMV will issue a new title with the correct owner’s name, removing the other party. This step is essential to legally establish who owns the car going forward and to protect yourself from liability.
Step 2: Dealing with the Auto Loan
While transferring a vehicle title is relatively straightforward, the auto loan is where most people hit a snag. Many assume that the divorce agreement alone is enough to transfer the loan responsibility. Unfortunately, lenders don’t work that way.
Just because the court order says that one person will take over the loan, the lender is not obligated to remove the other person’s name from the loan documents. Most lenders require the loan to be refinanced in the name of the person who is taking responsibility for the payments.
Why refinance?
Auto loans are contracts between the borrower(s) and the lender. Unless the loan is refinanced, both parties remain legally responsible for the debt. This means if your ex-spouse misses a payment or defaults, your credit score will suffer—even if you no longer have the car.
A Real Client Story
We once helped a client whose ex was awarded the car but never refinanced the loan. When her ex stopped making payments, her credit took a serious hit. Although she no longer had possession of the vehicle, she remained liable because her name was still on the loan. We had to file a motion to enforce the divorce judgment to protect her interests, but this situation could have been avoided if the loan had been refinanced immediately after the divorce.
This story illustrates the importance of making sure the loan is refinanced promptly. Without this step, you remain vulnerable to financial harm.
How to Include Refinancing and Transfer Timelines in Your Divorce Agreement
To avoid confusion and future disputes, it’s vital to be proactive during the divorce process itself. At Divorce661, we help clients draft divorce agreements that clearly outline timelines and responsibilities for refinancing loans and transferring titles.
Here are some key elements to consider including in your divorce judgment:
- Specific deadlines: Set a timeline for when the refinancing of the auto loan must be completed.
- Consequences for non-compliance: Include language that explains what happens if the refinancing isn’t approved or completed within the timeline.
- Title transfer deadlines: Specify when the vehicle title must be updated at the DMV.
- Contingency plans: Address what happens if the responsible party cannot refinance due to credit or other issues.
Having these clear guidelines in your judgment helps prevent delays and ensures both parties understand their obligations.
Updating Registration and Insurance
Once the title and loan are properly transferred, don’t forget about the vehicle registration and insurance policies. These are often overlooked but equally important steps.
Vehicle Registration: Make sure the vehicle registration is updated to reflect the new owner. This is necessary to avoid any legal complications or fines related to vehicle ownership.
Insurance Policies: Update the car insurance policy to remove the other party’s name and add the responsible party. This protects you from liability if the other person is involved in an accident or fails to maintain insurance coverage.
Failing to update registration and insurance can leave you exposed to financial risk and legal responsibility even after the divorce is finalized.
Protecting Your Credit and Future Financial Health
Your credit score is one of your most valuable financial assets, and divorce-related vehicle loans can impact it significantly. By properly transferring auto loans and titles, you safeguard your credit and avoid surprises down the road.
Remember these tips to protect yourself:
- Refinance the auto loan immediately: Don’t wait months or years. The sooner you refinance, the sooner you remove your liability.
- Confirm title transfer with the DMV: Make sure the title is updated to reflect the correct owner.
- Update insurance and registration: Keep all records current to avoid liability.
- Keep documentation: Maintain copies of your divorce judgment, refinance paperwork, and DMV title transfer confirmations.
- Seek professional help: If you hit any roadblocks, working with an attorney or divorce service can help you enforce the judgment and protect your rights.
How Divorce661 Can Help You Navigate This Process
At Divorce661, we understand that divorce is challenging enough without adding confusing financial and legal burdens. That’s why we offer flat-fee divorce services that include clear language for auto loan transfers, title changes, and refinancing timelines.
Our approach includes:
- Custom judgment terms tailored to your unique situation
- Remote service so you can complete everything from home
- Experienced guidance to ensure all legal steps are followed correctly
- Support to enforce the judgment if refinancing or title transfers aren’t completed on time
Thousands of California families have trusted Divorce661 since 2012 to handle these details and protect their financial futures.
Final Thoughts
Transferring auto loans and car titles after divorce is a critical step that many overlook, but it can have lasting consequences on your credit and legal liability. By understanding the process and taking action immediately, you protect yourself from financial risk and ensure a clean break from your ex-spouse.
If you’ve recently finalized a divorce and still find yourself tied to a car loan or vehicle title with your ex, don’t delay. Take the necessary steps to refinance the loan, update the title, and adjust your registration and insurance policies.
For personalized assistance and to make sure everything is done legally and cleanly, consider reaching out for professional help. A trusted divorce service can guide you through the process and give you peace of mind.
Your future financial health is worth the effort.
Need help transferring auto loans and car titles after divorce? Visit Divorce661.com for a free consultation today.
