The potential risks of co-signing an auto loan
If the primary borrower doesn't make their monthly loan payment, you will be asked to make the payment. Any missed payments could also appear on your credit reports and impact your credit scores, making it harder for you to get credit in the future.
In other words, if you wanted to get in the car and drive away with it, you'd have the right to do so, since (presumably) you're the owner of the car as well (this does not apply if you're only a co-signer on a loan). You could also take the co-signer to court for financial damages.
As we spoke about above, it is at your discretion to peacefully take the car if you have a key and access to it as an owner. If you do not have a key and this is the first time that you are sharing this since we started the discussion, then you cannot take it back on your own.
Ending a Cosigned Car Loan. As the cosigner, you can't remove the primary borrower from the loan. Unfortunately, since you have no legal rights to the vehicle, the primary borrower has to take the initiative to remove someone's name from the contract.
A co-signer or co-borrower can request a release from a car loan, refinance the loan, pay off the loan or sell the vehicle to remove themselves from the loan agreement. It is important to communicate with the other borrower and come to an agreement on how to handle the loan before taking any action.
But if your circumstances change over time or your credit score improves and you would like to remove the co-signer from your loan, there are three primary options. You can refinance, get a co-signer release or pay off the loan.
1. If the car is jointly owned, then the creditor has the right to foreclose on their lien, which would include a forced sale of the car; 2. This is the case even if your car is jointly owned with your wife.
There's no such thing as "primary" owner. You are either a co-owner on the title or you are not. The car is legally titled to each of you, so neither of you could be accused of theft if you took possession of the car or drove off with it.
Ownership Rights: A crucial difference between a co-signer and a co-borrower relates to the ownership of the vehicle. A co-borrower, also known as a joint applicant, shares equal ownership rights of the car with the primary borrower. They have legal authority to use the vehicle as they please.
Legally, the vehicle belongs to whoever is listed on the car title as the owner or joint owner, which may include the lienholder if the car is currently financed.
Buyers can indeed be on the loan but NOT on title.
I should add though that this applies to conventional (conforming and jumbo) loans only; FHA and VA loans (and some jumbo) loans require all borrowers on the loan to also be on title.
Cosigners can take the primary borrower to court if the primary borrower fails to repay the loan or otherwise fails to fulfill the terms of their agreement. As you learn about getting a cosigner, you'll see that they can help you get a loan you may not otherwise qualify for.
Unlike co-borrowers, who are on the title or have some claim to the property or funds, co-signers have no title or ownership of the property the funds are used for. For example, a co-signer for a vehicle has no legal right to the financed vehicle.
However, the primary borrower is the one to typically complete the loan application first and thus serves as the main point of contact for the loan. For both borrowers, the lender considers income, credit history and financial stability as crucial factors for loan approval and terms.
If you want to sell the car by yourself, you may not be able to – you're likely to need your co-borrower to complete the sale. Both of your names are on the title, which can make selling the vehicle complicated. You're also likely to need your co-borrower's permission to transfer ownership legitimately.
However, if the primary borrower defaults and the co-signer doesn't step in to pay, the co-signer is held responsible, and their credit score may suffer. Co-owners, on the other hand, are equally responsible for the loan from the start. If payments are made on time, both parties' credit scores can improve.
He can not take it away from you. But, if you are both in the title & registration card, you are both co-owners too. If you are in the title alone, it is your car.
The order of the names on the title do not matter.
Yes. Each of your have a right to keep the vehicle in your posession. However, if you try to get the vehicle from the other owner, you cannot breach the peace to take it, and example: you cannot break into a garage or somethng like that.
For married couples the rule of thumb is for each spouse to individually own the car they drive. The reason for this is to limit liability in the event of an accident.
Your car is considered personal property, so it may be protected by your state's motor vehicle exemption. This exemption allows you to keep a certain amount of equity in your vehicle safe from creditors. Equity is the difference between your car's current market value and what you still owe on the loan.
– While the cosigner is contractually committed to the loan, they have no rights to the vehicle. Even if they find themselves having to take over payments, they cannot take possession of the car.
Bottom Line. While refinancing is the most straightforward and obvious way to remove a person from a mortgage, that option isn't always available or optimal. Doing so without refinancing is possible via mortgage assumption, loan modification or even bankruptcy.