Can the Liability for Personal Loans Be Transferred?

Personal LoansPersonal loans are financial products that may come in handy when one has a sudden need for extra cash or for funds for an out-of-the-normal expense. While most people may be aware of the convenience of taking out a personal loan, many wonder if liability for this type of loan is transferable.

There are a lot of grey areas when it comes to the answer to that question. This blog post will outline some of the key factors that contribute to whether or not the liability for a personal loan may be transferred to another person.

Can the Liability for Personal Loans Be Transferred?

The short answer to this question is no. Personal loan liability cannot be transferred to another person. The main reason behind this is that the specifics of a personal loan (namely, the interest rate and other loan terms) are based on the personal credit score of the borrower. Since every individual’s credit score and financial situation are different, an existing personal loan cannot be transferred to a different borrower.

What Happens if a Personal Loan is Left Unpaid?

Choosing not to pay for a personal loan will have a major effect on your credit score. This will result in the lender sending your loan to a collections agency, which may be extremely stressful for you. Another consequence may be getting reported to the credit bureaus Experian, Equifax, and TransUnion. This negative mark on your credit score will stay on your record for seven years after your final payment. Also, if your lender set off a clause in the loan contract, they may take out funds from a specific bank account.

Cosigners and Guarantors

If there was a cosigner or guarantor on the personal loan, they would be every bit as liable for repaying it as the original borrower. Should the main borrower default on their loan, the responsibility for repayment will fall to the cosigner or guarantor. Before a cosigner is contacted by the lender, they will try to exhaust all means to reach the original borrower first. However, this does not take away from the fact that the cosigner or guarantor will be legally responsible for repaying any loan balances that are uncollected.

Transferring Loans

While it may not be possible to transfer a personal loan to another person, there may be a slight chance of transferring a mortgage or car loan. While this is rare, it is possible under certain circumstances. Some requirements are that the new borrower has the same or higher credit standing and must be qualified for the loan.


While it may be remotely possible to have loans transferred to another person, these types of loans are rare. Moreover, it is generally not possible for personal loans to be transferred from one person to another unless a cosigner or guarantor signed the loan with you. In a nutshell, before taking out any type of loan product, you must read the terms and conditions well. Knowing this, it is paramount that a borrower makes sure that they will have the capacity to continually repay the loan. Lastly, working with a tried and tested lending agency will help you ensure that you will be able to get approved for the loan that will suit your needs and paying capacity.

If you are looking for a reliable lending agency that offers personal loans, come to Central Loan and Finance Memphis. We have served the city of Memphis since 1998. We believe you can’t always judge a book by its cover when it comes to past credit and will never turn any applicant away. We make fair, honest, straightforward loans and believe in the value of relationships – especially in times of need. Please call to inquire about a loan today.

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