We’re about to (all things working out) buy a new car, and we will have an extra old car that is still in perfect running condition that we wouldn’t get any money for if we tried to sell it (a 1999 Tercel - it’ll probably run for years yet, but we’d get $1000 for it if we were lucky). My sister and brother-in-law recently lost a car due to a major engine failure, and they’re not dealing well with being a one-car family. We are thinking that it would make sense for them to borrow our extra car once we take the new one home, but I wanted to run it by you guys, and see if you had any advice on things to be aware of in this kind of situation.
We’re planning to talk to our insurance people for the new car this week, and we’ll also ask them about how to go about lending a car to a family member and making sure that everyone’s asses are covered should anything happen. Anything else we should be thinking of?
ETA: They’re both in their forties and good drivers - we have no expectation that they would do anything stupid with the car.
I say don’t do it. Mostly because I used to have a very dysfunctional family. I “lent” my sister my beater car and not only did she not give me the money to pay for the insurance, she let her boyfriend for the week use it. Guess who got dinged for the accident?
Make sure they are included on the insurance note incase an officer stops them and is really bother some about the different owner issue, unlikely. You’re liable if they dump it on the curb and are not willing to pay for it, that sounds unlikely.
I too would just give it to them, if you can afford it. My husband and I helped some family out with a car after theirs was lost to a house fire.
Gifting it made for no worries about insurance or if it was being maintained or anything like that.
Plus you can always use the leverage later in family disputes.
Unless you really really really want the car back, give it to them rather than loaning it.
In addition, don’t give them the car keys until they have changed the vehicle registration. That is, give them the signed title transfer, have them go to the Department of Motor Vehicles and transfer the title, and then come back to get the car.
I learned this by doing exactly what you are doing. And my family member “kept meaning to go transfer the title”–but didn’t. They got cited for traffic and parking violations, didn’t pay them, and I got stuck. They are wonderful people–just a bit disorganized. And they were financially strapped, so getting the title transferred was a low priority.
If you keep your name on the title, at least in Wisconsin, you are liable for all the insurance, any accidents and any tickets where the driver cannot be identified.
Well done on your generosity. You won’t regret it.
I lent (that’s “loaned” for people under 70) my car to my brother for a year I was spending in Europe. I gave him a notarized permission letter and he arranged for his own insurance company to insure it for the year. It worked out well. Some hit and run clown in a parking lot caved in a door but his insurance company paid for a replacement.
Yep, gift it. Or sell it to them for $10 so that the taxes aren’t a big deal. Either way, make sure a title transfer happens and they get everything put into their name.
If you loan it, and they crash it while under your insurance (even if they’re not stupid w/ your car, other drivers might be), your rates will get jacked up sky high.
Just give the car to them and sit back and wait for the good karma to come your way.
Hmm, things to think about. I think we’d have to get a signed agreement for everything - my sister is well-meaning, but she tends to remember things the way she WANTS them to be. Either that or, as so many of you have said, make a gift (or cheap purchase) of the car. We would like it back, though - it wouldn’t sell for much, but it has value to us.
If the car’s in your name, you’re responsible. Whether you give it to them or sell it, sign the title over before they take the car. If you want to sell it but don’t trust them to pay, have them sign a promissory note
But it’s be much better just to give it to them. That way there’ll be no hard feelings if it breaks down, or if it’s in bad shape when you get it back.
I loaned a car to my Mother about ten years ago. She totalled it - rear-ended another car which was also totalled. Even though she has been nowhere near the ignition of a car of mine since then, and never will be, I am still paying more for insurance because of it.
Lease it to them for $1. In the lease stipulate that they are responsible for insurance, gas, maintenance, etc. Cancel your own insurance on the vehicle, and ask for their proof of insurance before you give them possession. The lease will also document the other things you want in writing.
Sell it to them with an option to buy it back. It avoids you having the car on your insurance and liability to you if they get in a collision. Also, don’t expect to get the car back in good condition.
There’s a lot to be said for having clear boundaries.
I would either give it to them or sell it to them cheaply with all associated paperwork in order.
If you “loan” it and it breaks down, who is responsible for repairs? If it gets ticketed for something, who will pay? Who is responsible for the inspection and insurance?
All questions have clear answers when the the car is owned, but not so clear when loaned.
Also, if they don’t own it, the cost to walk away is zero. I could do a lovely thread on “Ask the guy whos stepdaughter loaned wifes car to a friend who promptly hit someone”
Do not just sign the title over to them. You need to make sure that they submit and process the title change. That’s why you give them the title, have them go and process the change, and THEN you give them the car keys. People in financial trouble “forget” to go pay the processing fee and figure it won’t matter if they leave the car in your name. But it matters for tickets and insurance…
