You asked a few questions,
Does anyone have any idea about this? Is everything right here? Any gotchas that I need to be aware of?
It's hard to answer those, because we're getting your description of the proposed deal, and that inherently leaves some gaps.
If we take a step back, and ignore whether or not the seller is getting taken advantage of by the ...
They aren't transferring the loan. The situation is that the owner of the car is upside-down on their loan. That means they owe more money than the car is worth. Lender N is willing to incorporate this deficit into the loan they are offering for the new car.
original price of car 20K
original loan balance 18K
current loan balance 15K
value of ...