Can a loan be transferred to another person

What the law says

According to Article 391 of the Civil Code of the Russian Federation, a loan can be transferred to another person, but only with their consent. The process can also be carried out only with the bank's consent; therefore, you cannot simply arrange with a relative to transfer the debt to them without the lender's approval. Under the law, the lending institution may object to the transfer of the loan, in which case the obligations will remain with the original borrower.

What is required to transfer a loan

If it is necessary to transfer a loan to another person, you must jointly visit the bank branch and fill out an application for document reissuance. Please note that the application must state a valid reason for transferring the debt. Reasons considered valid by the lending institution include: 

• severe illness of the borrower;
• decrease in regular income; 
• job loss; 
• divorce. 

Each reason for transferring the debt to a new borrower must be documented. You can submit a 2-NDFL income certificate, a copy of the divorce certificate, an employment record book entry confirming dismissal or layoff, or medical certificates regarding an illness. 

The person to whom the loan will be issued must appear at the bank in person and provide information about themselves to the lender. The bank is guaranteed to refuse the transfer if the new borrower does not appear together with the debtor. Written consent and original documents will not suffice to transfer the loan obligations. 

To make a decision on approving the debt transfer to a new borrower, the lending institution's staff will assess their solvency and reliability and review all provided information. In most cases, the completed loan transfer application form is reviewed more thoroughly than during the initial loan application. If the bank makes a mistake at this stage, problems with mandatory payments and debt repayment may arise later. The bank may refuse the loan transfer altogether if it is satisfied with the current borrower, who makes regular payments and does not breach the agreement.  

To whom a loan can be transferred

Any capable individual who gives their consent can become the new borrower. It is not mandatory to transfer the loan to close friends, relatives, or a spouse. 

It is impossible to forcibly transfer a loan agreement to another person. This cannot be done even if the original borrower took out the money from the bank at the request of someone else. If there is a notarized receipt confirming the agreement, the borrower wishing to transfer their loan to another person may apply to court. The probability that the court will satisfy the claim in such a situation is high. The court decision will not relieve the borrower of obligations to the bank; it will only compel the debtor to return the money. 

What documents are required

The list of documents required to transfer a loan to another person varies by bank. Most often, the following are required: 

• passport; 
• A INSURANCE NUMBER (SNILS);
• A TAX ID (INN); 
• a copy of the employment record book or employment contract; 
• an application form drafted according to the bank's template; 
• proof of income using the bank's form or 2-NDFL.

In addition to this list, the following may be requested: 

• military service card; 
• documents for owned property; 
• marriage and divorce certificates; 
• child's birth certificate; 
• a statement from an account at another bank confirming debt repayment. 

Documents from the second list are not required by all banks, but the client must provide them upon request. 

How to transfer a loan to another person

To expedite the process of transferring a loan to another person, you need to obtain a certificate of outstanding debt and repayment terms from the lending institution. The new borrower must be informed of these terms. 

Next, you need to establish a valid reason for the transfer. For example, suppose a person was laid off and is getting divorced. In this case, the former reason will carry more weight for the bank, especially if the borrower's financial situation does not change after the divorce. 

You should also visit or call the bank in advance to find out what specific documents will be required from the borrower and the new client. In some situations, a spouse's written consent to transfer the loan may be required. 

After agreeing on all the listed nuances, both borrowers must apply to the bank. The transfer follows this procedure: 

• submit all documents and confirmations, and fill out an application; 
• wait for the bank's decision and, if necessary, provide additional documents.
• reissue the insurance (if required by the bank); 
• sign a consent form to change the borrower in the loan agreement. 

The instructions described apply only to standard loans. The situation is different for secured loans. In some cases, difficulties will be associated with reissuing the collateral. At the preparatory stage, it will be necessary to reissue the collateral documents and take out a new loan to pay off the old one. 

For secured loans, banks rarely accommodate the client and require the original borrower to close the debt. Reissuing is only possible if serious financial problems are identified, but the client will initially be offered refinancing. The agreement will state that the approved amount will be used to pay off the existing debt, but the new borrower will be obligated to close the new loan. 

Specifics of mortgage loan transfer

Transferring a mortgage loan is somewhat more complicated. The process consists of three stages: 

• submitting an application and documents;
• review of the candidate;  
• reissuing the loan upon a positive outcome. 

As with a consumer loan, the new borrower must visit the bank in person and declare their intention to transfer the mortgage to their name. The decision will be made after a reliability check. 

Candidates wishing to transfer the mortgage to their name must meet the following requirements: 

1. Age from 21-23 years at the time of application. 
2. Age at the time of debt repayment – no more than 75 years. 
3. Military ID for male applicants.
4. Certificate of income from the place of work or in the bank's format.
5. Total work experience of at least one year, with at least 3 months at the last job. 
6. Positive credit history. 

Why the bank refuses the transfer

The bank conducts a check of the new borrower to determine how profitable the transaction will be. At the same time, the lending institution may refuse to reissue the agreement without explanation. Grounds for refusal may include: 

• damaged credit history or poor credit rating; 
• unstable or low salary; 
• non-compliance with age requirements; 
• lack of required documents; 
• errors in documents; 
• criminal record; 
• lack of property ownership; 
• outstanding loans in other banks; 
• active guarantee, or the potential borrower is a co-borrower on other agreements.  

Some of these factors are fixable. They can be resolved and the application can be resubmitted to the bank. If the potential borrower has a low credit rating, it will take time to improve it. In such a situation, it is better to refinance the loan or find another person who meets the bank's requirements.

If the application is approved, a new agreement is concluded between three parties: the current borrower, the new borrower, and the lender. 

Consequences of changing the borrower

The final decision on changing the borrower rests with the bank. In practice, lenders rarely agree to such transactions. The percentage of approved loan transfer applications is just over 1%. Not all banks provide this service. Major financial institutions offer clients refinancing instead. 

If the bank does approve the application, it will do so for its own profit. In most cases, the new borrower will receive a loan with a higher interest rate. The institution will also charge a fee for reissuing the documents. 

When issuing the loan, the following terms may change: 

• increase or decrease of the loan term; 
• increase in the interest rate; 
• increase in the regular payment amount. 

If you have a trusting relationship with someone capable of taking over the loan obligations, it will likely be more profitable for both to simply pay off the loan under the original terms without reissuing it.