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.
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.
Can a co-signer remove themselves from a car loan? In general, the terms of the co-signed loan cannot be undone. To reverse the co-signer's obligation, the co-signed loan must be paid off, or refinanced, with or without a new co-signer.
Although voluntary repossession will not negatively impact your credit as badly as involuntary repossession, it will appear on your credit history as a negative mark and will hurt your score.
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.
While you won't have any legal rights to the vehicle unless granted permission, you must be prepared to cover payments, late fees and collection costs if the borrower defaults. Failing to keep up with car loan payments will negatively impact your credit score.
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.
A co-signer doesn't need to stay on the loan for the life of it, either. After making the required principal and interest payments, you can apply to release them and manage repayment on your own.
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.
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.
Keep in mind that a cosigner can't take possession of a car they've cosigned for. A cosigner doesn't have any legal rights to the vehicle, so they can't take a car from its rightful owner, the primary borrower.
Option #1: Get a Cosigner Release
If you cosigned for a loan, one of the quickest routes out is to apply to the lender for a cosigner release. This lets the cosigner off the hook, so that only the primary borrower is the one listed on the loan going forward.
Removing a Cosigner from Your Auto Loan
If you're wondering “how to remove a cosigner from a car loan,” it is possible to do so. Contact your lender to discuss options. They will only agree if your credit history has improved to the point where you're not a risk to them.
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.
You can renegotiate, refinance or sell your vehicle to get out of a car loan you can't afford. Refinancing can be a good option if your credit score has improved since you initially took out the loan. When trying to exit a lease early, be aware of potential fees and consider transferring the lease to someone else.
Note: If you're selling a car with an active loan, you're still the one responsible for paying it off, so the remaining balance on the loan will likely be subtracted from the price the dealer offers you. So if you owe more than what the dealer offers, you'll need to pay the difference to the lienholder.
In this scenario, you tell the lender you can no longer make payments ask them to take the car back. You hand over the keys and you may also have to hand over money to make up the value of the loan. Voluntary repossession allows you to return a car you financed without being subject to the full repossession process.