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Assumable loans are those that allow someone else to "assume" or take over the payments on the loan without having to start over in terms of payments. For instance, someone who could no longer afford their vehicle or mortgage payments could contact their lender to see if they allow the loan to be assumed. If the lender allows for assumable loans, then the borrower could advertise this to friends and family.
Though it is still credit based, the friend or family member could continue to make payments on the loan and take possession of the vehicle or home. Payments will be due on the same day, so if the loan was assumed on the 10th and the original payments were due on the 15th, then the new borrower only has five days to make the payment before a grace period would kick in. It is important to take a close look at the loan terms and conditions before agreeing to assume it.
This helps the original borrowers because they don't have to worry about damaging their credit too much, and it helps the new borrowers because it saves them money if the current loan terms are favorable. Finally, it helps the lender by keeping the loan payments coming in, so assumable loans are useful for everyone involved.
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