Co-signing means you are responsible for covering payments if the main borrower cannot, but you do not have any legal rights to the car. Co-owning means both parties have equal ownership and financial responsibility for the car.
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. 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.
A cosigner doesn't have any legal rights to the car they've cosigned for, so they can't take a vehicle from its owner. Cosigners havethe same obligations as the primary borrower if the loan goes into default, but the lender isgoing to contact the cosigner to make sure the loan gets paid before this point.
Cosigner: This is a person with solid credit and income who can help boost your chances of approval. Although liable for payments if you default, the cosigner doesn't share vehicle ownership and won't be on the car title.
A co-signer may want to be removed from an auto loan for several reasons. Co-signers cannot remove themselves from a loan or be removed by the primary borrower. A co-signer's obligation is eliminated when the loan is paid off or refinanced without their involvement.
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.
If you are both owners of the vehicle, you'd both have legal rights to the vehicle. 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).
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.
Request release from a co-signed loan
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.
“Repossession is bad for both the borrower and the cosigner because both credit scores will take a hit. Late payments, loan defaults, loans sent to collections and court judgments can all be noted on the primary borrower reports and the cosigner's reports,” says Howard Dvorkin, CPA and Chairman at Debt.com.
Can I sue the person I co-signed for if they don't pay? 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.
A co-signer is responsible for making payments if the borrower is unable to. But co-signers don't have legal access to the property or money from the loan. Co-borrowers share payment responsibilities too, but they also have equal rights to any properties or money tied to the loan in question.
Acting as a co-signer can have serious financial consequences. First, co-signers assume legal responsibility for a debt. 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.
While you don't necessarily have the same rights to the vehicle as the primary borrower, you – as the co-signer – are equally responsible for ensuring the loan is paid back. If the primary borrower doesn't make their monthly loan payment, you will be asked to make the payment.
Remember that a co-signer is not on the title of the property and cannot take ownership of it. Getting a home loan with a partner is the same as if applying solo. Each party will need to provide proof of income, assets and bank statements, proof of identity, and other documents.
A car title is a legal document the state government issues to demonstrate who owns the vehicle. A title includes official information about the vehicle and the owner. A car title differs from vehicle registration and proof of insurance — it's strictly proof of car ownership.
Your first step should be to contact the dealership where you purchased the car and explain the situation. Be specific about the problems you're experiencing and what you want the dealer to do about it. It's best to put your concerns in writing – that way, you have proof of your efforts to resolve the issue.
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.
A cosigner on a loan is legally responsible for the debt if the primary borrower defaults. Cosigning a loan will show up on your credit report and can impact your credit score if the primary borrower pays late or defaults. Cosigners may sign for student loans, personal loans, credit cards, and even mortgages.
But most states allow cosigners to take primary borrowers to court in the following situations: Cross claims: If you default on or fail to repay the loan, the lender could sue the cosigner for the money owed. The cosigner may then be able to sue you for the money that the lender is trying to recover.
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.
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.
Remember, the primary borrower legally owns the vehicle, so an auto loan co-signer cannot take over without the consent of all parties and a refinance loan.