lenders do not remove co signers from loans. The debt has to be retired. This can be done by paying it off directly or refinancing the loan.
You may have to go to court and file a lawsuit to seek a court order for the co-signer's removal. You'll need to provide evidence that the co-signer has not made any payments and that you have been solely responsible for the car payments.
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.
Cosigning a loan doesn't give you any title, ownership, or other rights to the property the loan is paying for. Your only role is to repay the loan if the main borrower falls behind on the payments or defaults.
Your best option to get your name off a large cosigned loan is to have the person who's using the money refinance the loan without your name on the new loan. Another option is to help the borrower improve their credit history. You can ask the person using the money to make extra payments to pay off the loan faster.
Removing a co-borrower or cosigner from a mortgage is possible but difficult, and your lender may insist that you pay off the mortgage in full or refinance the house by taking out a new loan solely in your name.
The lender may take legal action against you, pursue you through debt collection agencies, or sell the debt to a “debt buyer” to try to collect the money that is owed on the loan if the borrower does not pay or defaults on his or her repayment obligations.
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.
Being removed as a cosigner from a loan could potentially hurt your credit scores. How much your scores are impacted depends on the details of your credit profile.
Cosigners can't take possession of the vehicle they cosign for or remove the primary borrower from the loan since their name isn't on the vehicle's title.
Removing a co-signer from a car loan requires the loan to be paid off. If there's a balance remaining, that amount must be refinanced. The primary borrower could possibly qualify alone, or a new co-signer may be needed.
Yes, you can sue the person you co-signed for if they don't make the payments they promised to make. You may be able to get a judgment against them in court, but it could be hard to collect that money since they didn't pay the debt in the first place.
Pay off the loan
If this is a manageable option, you must contact the lender and pay off the current balance along with the payoff amount. Once the loan is paid off in full, the responsibilities of both the primary borrower and the co-signer will end.
A release can be obtained after a certain number of on-time payments and a credit check of the original borrower to determine whether they are now creditworthy. Check with your lender to figure out the requirements for qualifying for a co-signer release.
A loan assumption or modification could release a co-borrower from your mortgage without refinancing, preserving the current homeownership. However, lenders aren't required to grant these options, so be prepared to negotiate.
Being a cosigner does not give you rights to the property. A cosigner has no title or ownership in the property secured for the loan. Additionally, a cosigner has no legal right to occupy a home as a primary or secondary residence, unlike the primary signer/borrower.
Be sure you can afford to pay the loan – you should keep in mind that you are obligating yourself to the loan, which may prevent you from obtaining other credit you may want. Do not pledge property to secure the loan unless you fully understand the consequences. If the borrower defaults, you could lose your property.
So, if the primary borrower is unable to pay as agreed, the co-signer may have to pay the full amount of what's owed. Second, a co-signed loan will appear on the co-signer's credit reports. The co-signer's credit scores may be positively or negatively impacted by the borrower's credit behavior.
Co-signers can make a written request to the lender to be released from a loan. In certain cases, like some student loans, there may be a provision that allows a co-signer to take their name off a loan.
They are equally responsible for the debt and must pay if the borrower does not make payments or defaults on the loan. Who can be a co-signer comes down to credit history and standing. A co-signer must have their income, assets, credit score and debt-to-income ratio in good shape to receive approval.
A co-signer applies for the home loan right along with you. However, they are not on the title of the home. The co-signers name is only on the loan, meaning that while they are financially responsible for paying back the mortgage, they do not have ownership of the property.