In other words, a cosigner is on the vehicle's note (making them liable for the payments) but not the car title (which indicates ownership). As a cosigner, you don't have ownership rights to the vehicle so you can't repossess it from the primary borrower.
Equal rights: The co-borrower has equal rights to the car as the primary borrower. This means the co-owner must be involved in the sale or transfer of the car. Insurance: Even if the co-owner doesn't use the car, they will likely need to be on the insurance policy. This can mean higher costs for both involved.
The cosigner is legally responsible for the debt if the primary borrower can't make payments. Any late or missed payments can negatively impact both parties' credit scores. Furthermore, the cosigner doesn't have any ownership of the vehicle.
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.
Cosigners are people who guarantee debt for someone who cannot qualify for a loan on their own. The understanding is that the primary borrower is the person legally responsible for repaying what is owed. Co-borrowers, on the other hand, are people who want to take on a shared debt with another person.
Can a cosigner become the primary owner? If you are a cosigner on a car or other property loan, you don't have any right to own the property or assets if the primary borrower defaults. If the primary borrower defaults or can't make payments, you can try asking the lender to refinance with you as the primary borrower.
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.
A co-signer is a guarantor for the primary borrower. Co-signers promise to assume responsibility for repayment if the primary borrower doesn't pay as required.
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. When they look at your application, lenders will also consider you and your co-signer's debt-to-income (DTI) ratio.
When there are multiple borrowers on a transaction, only one borrower needs to occupy and take title to the property, except as otherwise required for mortgages that have guarantors or co-signers.
The auto loan co-signer equally accepts the loan debt responsibility along with the primary borrower, the person who will own and drive the car. Three things every co-signer should know: The cosigner is responsible for paying back loan if the primary signer stops paying or is unable to pay.
The same applies to a co-signer on a vehicle loan. Cosigners have no ownership claim on the automobile, only an obligation to pay back the money borrowed on the car. “As a co-signer, you are equally responsible for the auto loan.
The Bottom Line
One of the risks of cosigning a loan is that at some point you may no longer want to have your name on the loan. Fortunately, you can have your name removed, but you will have to take the appropriate steps depending on the cosigned loan type.
The order of the names on the title do not matter.
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.
Generally, lenders will consider the credit score of all applicants applying for a loan.
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.
To get a co-signer release you will first need to contact your lender. After contacting them you can request the release — if the lender offers it. This is just paperwork that removes the co-signer from the loan and places you, the primary borrower, as the sole borrower on the loan.
A co-signer is a person – such as a parent, family member, or a friend – who adds their information, including income and credit record, to the loan application and pledges to pay back the loan if you're unable to.
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 the primary person on the car loan dies, then full responsibility for the loan automatically goes to the co-signer, who will now need to pay the debt. If you find yourself in such a situation, keep up with the payments so as not to damage your credit and talk with the lender about the next steps to take.
The credit score required and other eligibility factors for buying a car vary by lender and loan terms. Still, you typically need a good credit score of 661 or higher to qualify for an auto loan. About 69% of retail vehicle financing is for borrowers with credit scores of 661 or higher, according to Experian.
You may still owe money on the repossessed car
As a co-signer, you are legally responsible for the loan. This means you are responsible for paying back any money owed on the loan. Once a car is repossessed, the lender can sell or auction the vehicle to receive back loan funds.
If you and your significant other purchased the car together and both of your names are on the title (and on the lease), you may need to sell the car or have one owner buy out the other's share. Otherwise, you still legally share ownership of the car and must work together on splitting its use.
No, a primary borrower cannot be removed from a car loan unless the car is sold and the loan is repaid or refinanced.