Refinancing a Car After Divorce: A Step-by-Step Guide

Divorce can be one of life's most challenging experiences, leaving many people overwhelmed and uncertain about their financial future. Untangling joint debts, such as car loans, can add significant stress to this transition.

Post-divorce car refinancing allows you to replace a joint auto loan with one solely in your name, giving you control over your financial obligations. Understanding your refinancing options early in the divorce process can protect your credit, save you money and avoid future financial disputes.

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Dividing your auto assets during a divorce

Dividing assets during a divorce can be complex and stressful. Many divorcees face similar struggles when dealing with joint debts, so you are not alone in this process.

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When it comes to dividing shared auto loans, here are your primary options: 

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• Sell the car: Selling your vehicle can be a straightforward way to split the proceeds and settle the loan. 
• Pay off the loan: If you or your ex-spouse has the cash, paying off the debt eliminates the shared financial obligation.
• Refinance the loan: Refinancing can remove your ex-spouse’s name from the loan and negotiate loan terms better suited to your situation.
• Buy out your ex-spouse’s share: If you want to keep a car you own jointly with your ex, you could buy out their portion. 
• Trade in for two less expensive cars: If your shared car has a high enough value, you could trade it in for two cars that each party can afford.

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How to refinance a car after divorce

Refinancing your car after divorce allows you to replace a joint loan with one solely in your name. This can give you full control over the loan terms, but you’ll need consent from your ex to move forward. Start the refinancing process with these steps: 

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1. Notify your ex-spouse

When refinancing a joint car loan after a divorce, it’s crucial to involve your ex-spouse. As the refinancing will replace the existing loan — with one in your name only — both parties typically need to consent.

Ideally, this issue should be addressed during the divorce proceedings. If the divorce decree doesn’t include refinancing details, obtain written consent from your ex-spouse to move forward with refinancing.

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2. Gather documentation

Once both parties consent to the refinance, you’ll need to collect the proper documentation. Lenders will typically ask for:

• Identification
• Proof of income
• Proof of insurance
• Vehicle details

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Following a divorce, you may also need additional documents, such as proof of spousal support or your divorce decree, which outlines the division of assets and responsibilities, including the car loan. 

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3. Compare offers from different lenders

Refinancing your car loan after divorce presents an opportunity to secure more favorable loan terms, potentially saving you a significant amount over the life of the loan.

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Be sure to compare offers from multiple lenders — including banks, credit unions and online platforms — to find the best rates and terms. Shopping around may help lower your interest rate, adjust your loan term or reduce your monthly payments.

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You can use our auto loan refinancing calculator to help compare offers from different lenders.

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4. Submit your application and review loan terms

After selecting a lender, submit your refinancing application along with the required documentation.

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Carefully review the loan terms before signing. Pay close attention to any clauses regarding vehicle ownership, changes in interest rates or potential income adjustments, especially if you're still finalizing your divorce.

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5. Finalize your loan and transfer the title

After refinancing, update your vehicle’s title to reflect the new ownership. If your ex-spouse’s name is still on the title, contact your local DMV to find out what documents are required for the transfer.

Typically, you will need the vehicle’s title, a valid ID, proof of your new loan, a copy of your divorce decree and other documents.

For more tips for refinancing a car after your divorce, check out our auto refinancing resources.

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FAQs

Here are some common questions about refinancing a car after a divorce:

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Can I refinance if I’m still legally married but separated?

Yes, refinancing is possible during a legal separation, but you’ll need your spouse's consent if they are still listed on the loan or title. If you are in the process of divorcing, addressing a shared auto loan now can help smooth the division of assets when the divorce is finalized. Legal advice may also be necessary when dealing with loans during separation.

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How does refinancing a car work after divorce?

Post-divorce refinancing means replacing your joint loan with a new loan — in your name only. Refinancing can also help you to secure loan terms better suited to your new financial situation. To refinance your car after a divorce, you may need documentation of your ex-spouse's consent, a divorce decree or spousal support.

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How long do you have to refinance a car after divorce?

There is no set cut-off time for refinancing a car after divorce, but you should act quickly to legally divide assets and avoid future disputes.

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