Is it legal to have family or friend take over car payments?

Therein lies the problem. To insure a car, you must have an insurable interest in it. If you own the car, you have to insure it. You can sell the car to her, but that will probably trigger a full payment obligation to the lender. Good luck to you.

Keep in mind that if your friend or family member takes possession of the car but you do not transfer title and get released from the loan, you are still primarily liable for the car payments, and if an accident occurs, you will most likely be named in any arising lawsuit. Parking tickets, red light and speed camera tickets will come to you first. You should consider contacting the lender to see if they will release you and accept your family member/friend instead, given that your inability to pay foretells repossession. Lenders want repayment of loans, not the car back.

You can do it, but you will still be the one responsible for the loan payments. If payments are missed, the lender will come after you. You might want to do a sublease agreement. As for the insurance issue, if you do the sublease, they should be able to get insurance. Or you could try adding them to your insurance policy. Call your insurance agent to see what they suggest.