Inheriting a car from a relative who passed away can take some of the sting out of your loss. However, you can't make the payments in your relative's name. Instead, you'll have to get the car transferred to your name and refinance the car loan that came with it so you can continue making payments. Make them on time and your credit rating will thank you for it.

Inheritance Process

No matter how close you were to your relative, you can't just take his car home with you if he dies. His will must be processed by a court to make sure it's valid in a procedure known as probate. If there's no will the spouse and children usually have first rights to a deceased person's property, though the order of inheritance varies by state. If the deceased relative's family member has agreed to give you the car, he has to transfer ownership to you before you can take it.

Payment Priority

Car loans are a type of secured loan. That means the loan is guaranteed by real property, the car itself in this case. The lender places a lien on the loan when it's put in place, giving it the right to repossess the car if the borrower doesn't keep up the payments. Make sure you or the estate executor continue to make them until the probate process is completed.

Title Transfer

Once the probate is finished you can transfer the car to your name and become its legal owner. First, you'll have to provide your state motor vehicle office with proof you're the legal heir to the car. You'll then sign the new title and pay taxes on the license plates if your state assesses them. You'll also have to arrange for insurance. Plan ahead to cover the extra expenses and be ready to spend money on fuel, oil and maintenance as the miles roll by.

Refinance or Pay Up

To transfer the loan to your name you'll have to refinance it, which can require good credit, proof of income or a cosigner. You don't have to take out a loan, though. You can choose to pay off the car note in full and become the owner free and clear of any outstanding debt. Doing so can save you money in the long run because you're eliminating interest charges on the balance of the loan.