answered on 22/07/2013
A car loan is governed by an agreement between the lender and the borrower. The borrower is usually the owner of the car. As with any agreement, the car loan agreement can be varied so that a third party "takes over" the obligation of paying the instalments for the car loan. However, this must be agreed to by the lender, the borrower and the third party. Alternatively, the borrower / owner of the car can enter into a private agreement with the third party under which the third party agrees with the borrower / owner of the car to pay the instalments for the car loan. In such a case, the lender is not involved and the private agreement is strictly a relationship between the borrower / owner of the car and the third party only. The borrower / owner of the car remains liable to repay the car loan to the lender under the original car loan agreement. Therefore, if the third party fails to pay the instalments, the lender can have recourse to the borrower / owner of the car and may exercise the rights (if any) under the car loan agreement to take possession of the car. The borrower / owner of the car will have to enforce the private agreement against the third party separately.