If you and your spouse are considering sharing a car, you may be wondering: can car finance be in joint names? The answer is yes — you and your spouse or another person can borrow a joint loan that would be under both of your names.
Co-owning for a car loan
One benefit of having two names on the car title is favorable loan terms if both parties have a good credit score. However, it also implies equal access to the car and potentially elevated insurance charges. Both individuals must agree to sell or transfer ownership.
THE BANK AND THE COURTS DO NOT CARE. All they care about is that YOU signed the loan, so as far as they are concerned YOU owe the money and you owe ALL of the money to the bank, and the only way to change that is to pay the money back. The buyer can get another cosigner or you can sell the car to pay off the loan.
Benefits of Having a Co-Signer on Your Auto Loan
There can be if the co-signer has a strong credit profile and a good credit score. Having a co-signer can: Make it easier to get approved for a loan. Potentially qualify for lower interest rates and more favorable loan terms overall3.
In other words, a cosigner is on the vehicle's note (making them liable for the payments) but not the car title (which indicates ownership). As a cosigner, you don't have ownership rights to the vehicle so you can't repossess it from the primary borrower.
An auto loan co-signer is a person — often a family member — who takes responsibility to make any missed payments or repay an entire loan if the primary borrower doesn't. An auto loan co-signer doesn't have any ownership rights for the financed vehicle, and their name isn't on the title.
The cosigner is legally responsible for the debt if the primary borrower can't make payments. Any late or missed payments can negatively impact both parties' credit scores. Furthermore, the cosigner doesn't have any ownership of the vehicle.
Generally, lenders will consider the credit score of all applicants applying for a loan.
You can often remove a cosigner at any point during the loan period. Your loan paperwork might dictate specific terms, though. For example, some lenders require 24 months of on-time payments from the primary borrower before they'll consider releasing the cosigner.
If your credit history isn't quite up to snuff, it can mean getting denied for vehicle financing, even with a cosigner. In these cases, visiting a dealership that's prepared to work with bad credit borrowers may help.
So, the short answer is yes, you can refinance a car under another name, but there are a few things to consider first. Let's dive into the requirements. The new borrower will need to qualify for a loan on their own, meaning they'll need a good credit score and a reliable income.
It is of “no-matter” who is on title, As long as you have “their permission” to use the car. My wife has her own car in her name only and I drive it all the time. I have my own car in my name only and she drives my car all the time. I bought a car and gave it to my Elderly Dad to drive, I'm the only one on title.
The auto loan co-signer equally accepts the loan debt responsibility along with the primary borrower, the person who will own and drive the car. Three things every co-signer should know: The cosigner is responsible for paying back loan if the primary signer stops paying or is unable to pay.
Pros of having your spouse cosign on a loan
If your spouse has a better credit score than you, you may qualify for a better interest rate and be able to access more generous payment terms than you would if you were able to secure the loan by yourself.
You cannot simply list a spouse's income with, or instead of, your own if you apply in your name alone. However, you can list their income if your spouse agrees to become a “co-borrower” on the loan. It's possible to use your spouse's income on a loan application, but only under strict circumstances.
Unfortunately, once you sign an auto loan agreement, you can't add someone to that loan without refinancing. If you think you might want someone else to be on your loan, plan carefully, and put them on the contract right away. Otherwise, you'll have to refinance to add their name to your car loan.
Each auto lender has its own credit requirements, but typically a cosigner needs a credit score of 670 or more. Lenders also calculate the cosigner's debt-to-income ratio (DTI), which measures how much of their income goes to pay debt.
The quick answer is yes, but it's not as easy as you might think. "Lenders are generally averse to removing a co-signer," says Dean Kaplan, president of The Kaplan Group, a commercial debt collection agency. That's because by removing your name from the loan, the lender's risk goes up.
What credit score is needed to buy a car without a cosigner? People with prime credit scores of 661 or higher likely don't need an auto loan cosigner.
As a cosigner, you agree to personally pay any balance that the primary borrower cannot, so you must demonstrate that you have an income that would allow you to pay. In fact, your income is more important than that of the primary borrower. Your income does not have to necessarily come from a job, though.
It is better to be a co-borrower if you want to jointly own the car at the end of the loan term. You can be a co-signer if you're helping someone (like a close friend, child, parent, or spouse) get lower interest rates with your credit score.
A cosigner will need a credit score of 660 or better to get a personal loan with good terms. A 660 credit score is above the minimum credit score requirement for most major lenders, so the cosigner has a decent chance of getting approved as long as they meet the other requirements.
Thus, a co-signer only serves as a secondary source of payment in support of the borrower. Meanwhile, co-applicants share in the transaction itself.
A co-borrower has more responsibility (and ownership) than a co-signer because a co-borrower's name is on the loan, and they are expected to make payments. A co-signer only backs your loan and will not need to make payments unless you are unable to.
The Bottom Line
Both co-signers and co-borrowers can help strengthen your mortgage application by combining their finances and credit score with yours. Co-signers simply guarantee your mortgage, while co-borrowers will also have an ownership interest in the property you buy.