Although liable for payments if you default, the cosigner doesn't share vehicle ownership and won't be on the car title. They also generally don't make the regular monthly payments.
In short, it is possible to remove the cosigner, but you'll need to refinance, sell the car and pay off the loan, or take advantage of cosigner release options that exist for your particular loan.
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.
A cosigner is a second individual on your loan application who can help boost your chances of approval. A cosigner doesn't have ownership in the funds or the asset you're signing a loan for.
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.
Generally, co-borrowers share the title of the home. But this isn't always the case since the loan and the title are separate. Be aware that if you're a co-borrower and your name isn't on the title, you'll still be responsible for paying off the mortgage – but won't have the right to use the house.
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.
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.
In general, if someone takes or controls your property without your permission, it could potentially be considered theft. Here if you contacted the police department they would investigate whether it is theft and charge him with a crime if they believe one has occurred.
Fortunately, you can have your name removed, but you will have to take the appropriate steps depending on the cosigned loan type. Basically, you have two options: You can enable the main borrower to assume total control of the debt or you can get rid of the debt entirely.
Removing a Cosigner from a Car Loan
Sell the car: If you sell your car to someone else and use the money you get to pay off the rest of the loan in full, you'll release both yourself and the cosigner from your payment obligations.
You may be wondering if you can go about removing a cosigner from a car loan, and the answer is yes, you can. Often, you can simply contact your lender to get a cosigner released, but sometimes it can be more complicated.
In most cases, cosigners are not listed on the title unless they are also listed as co-owners of the vehicle.
You can remove the co-signer by refinancing your auto loan, receiving a co-signer release or paying off the loan. Before removing the co-signer, ensure your credit score is high enough to receive the same or comparable rate if you refinance.
Usually, when you cosign a car loan, you agree to be responsible for the debt if the primary debtor doesn't make payments or otherwise defaults on the loan. If the primary debtor defaults on the loan, then the creditor has the right to repossess the car and sell it.
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.
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.
If there isn't a current balance on the account, some credit card issuers may be willing to remove your name, provided the original borrower has decent credit. You or the original borrower can call and ask if this is an option.
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.
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.
As a cosigner on an auto loan, your credit suffers if the vehicle is repossessed. You may also be responsible for paying more on the loan even after repossession. You have options for avoiding repossession, including working with the lender to come up with a payment plan or being removed from the loan.
However, the co-signer doesn't need to be on the home's title. The lender looks at both your credit and the co-signer's credit to determine if you can get a loan.
They are on the deed, and thus have legal title rights to the property. They are not on the mortgage, however, and are technically not liable for paying the mortgage. This is a unique but all too uncommon circumstance, and seeking legal advice regarding financial protections is not a bad idea.
Along with combining income, co-borrowers share equal responsibility for the loan, and both own the car equally. Even though you both own the car, you may not both need to be present when you sell or trade the vehicle.