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Can You Remove a Cosigner From a Car Loan?

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Susan Guillory

Susan Guillory

Updated June 30, 2021
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Can You Remove a Cosigner From a Car Loan?; Sometimes you may need or want to remove a cosigner from your car loan. Learn about your options from Lantern by SoFi.
Back when you purchased your vehicle, if you needed a cosigner to qualify for your car loan, you were probably glad to have that person on board. But that may not always be the case.Maybe now your finances are better and you no longer need a cosigner. Or perhaps your cosigner was also your romantic partner but now you’re going through a breakup and don’t want any financial ties to each other. Or maybe you’re considering auto loan refinancing and need to remove your cosigner first.Whatever your reason, the question remains: Can you remove a cosigner from a car loan?The answer is yes…but it may not be easy. Read on for a deeper look at a few different options for removing a cosigner from a car loan.

What is a Cosigner?

Before we get into the details of how you can remove a cosigner from a car loan, let’s back up a step and talk about what exactly a cosigner is.When you take out a loan, like the one you got to buy a car, you are essentially stating that you can and will pay back the loan in full (plus interest). But how do lenders know that you really can? They look at your credit and financial history to determine the level of risk you present. If your credit score is low, it will likely seem to them that there’s a high risk that you might not be able to pay back the loan. In that case, potential lenders may turn you down for a car loan if you’re applying on your own.You do have the option, however, to bring on a cosigner to help you qualify for the loan. That cosigner is someone who has better credit than you and who agrees to be responsible if you’re not able to make a payment. This lowers the risk to the lender that your loan won’t be paid off. That’s because now there are two parties sharing the responsibility and the cosigner has better credit than you do, suggesting there’s a high likelihood that the loan will be paid. 

Who Can Be a Cosigner?

Many times, younger adults in need of a car loan may ask their parents to be their cosigners. Someone married might ask his or her spouse. You could even ask a good friend to cosign your loan. Whoever you choose for your cosigner, that person must have good credit. The credit bureau Experian notes that your cosigner should have a credit score of 670 or higher to help you qualify for the loan. Bear in mind that your potential lender will likely run a credit check on both of you as it makes its decision.

Cosigners and Credit

When you’re considering getting a cosigner, it’s important to be aware of how cosigning your loan will impact that person’s credit.When a cosigner cosigns a loan with you, the loan appears on that person’s credit report. If you aren’t able to pay the loan and your cosigner doesn't, either, both of your credit scores may drop. Also, having your loan on record may impact your cosigner’s ability to get other financing.However, if all goes well and you pay back your loan on time every month, your cosigner could potentially see an improvement in his or her credit as a result. Paying a loan on time each month could strengthen both of your credit histories.

What’s the Difference Between a Cosigner and Co-Borrower?

In your research on how to get your cosigner off your car loan, you may have come across the term “co-borrower.” It sounds similar to cosigner, but is it the same?No, it’s not the same. There are key differences that are important to understand.

Cosigners Are Responsible Only for the Loan

When you ask a friend or family member to cosign your loan, you are still the primary borrower. You’re going to use the funding and you’re going to pay back that loan. Your cosigner is more of an “in case of emergency” person. If you aren’t able to make a payment one month, the responsibility would fall to your cosigner to cover it.

Co-Borrowers Are Responsible for the Loan and the Car

A co-borrower, on the other hand, is just as responsible as you are for paying the loan back. As with a cosigner, you’ll both probably be expected to undergo a credit check when applying for the loan.But the main difference here is that a co-borrower has just as much right to ownership of the vehicle you’ve financed as you do. The title will be in both your names and you both, in theory, can use the vehicle.If you’re trying to figure out how to remove a cosigner from your car loan, you may want to start by finding out if you have a cosigner or a co-borrower. There may be different processes for removing a co-borrower. 

Can You Remove a Cosigner from a Car Loan?

Now back to the original question! Can you remove a cosigner from a car loan? Yes, you can.There are a few ways to go about doing this. Your course of action may depend on why you want to remove your cosigner and whether the cosigner is willing to work with you or not. If you’re divorcing from your cosigner, for example, it may be challenging to get your spouse to sign paperwork if things are contentious. Depending on the situation, plan accordingly for the time the process is likely to take.

How to Get a Cosigner Off a Car Loan

If you have a strained relationship with your cosigner, you may want to emphasize how being taken off your car loan will help that person. He or she won’t be tied to you financially and may find it easier to take out new financing. Plus, your ex-cosigner won’t be responsible for your car payment any more. Most people would be happy with these benefits!Here are a few different methods for getting your cosigner off your car loan.

Refinance the Car Loan to Get the Cosigner Off

If you initially took on a cosigner because you didn’t qualify for a good rate on your own, your situation may have changed. Perhaps now you could get a car loan on your own with no problem.In this case, refinancing could be the easiest and most beneficial to remove your cosigner. You may even end up paying less in interest on a refinancing loan than on your original loan.Just be aware of the cost of refinancing a car. Your current lender may charge you an early termination fee, and your old and new lenders might charge transaction fees. If you owe more than the car is worth, it may be challenging to find a lender at all.If you’ve already refinanced your car, you may wonder, “how many times can you refinance a car?” There’s technically no limit, but it’s a good idea to be smart about it. Each time you refinance, there should be a financial benefit for you.

See if You Have a Cosigner Release Option

Another option is to talk to your lender and ask whether you can remove a cosigner from your car loan. What’s the process? Some lenders offer a cosigner car loan removal option.This option agrees to release the cosigner if certain criteria have been met. For instance, a cosigner might be released after a certain number of payments have been made on time or a portion of the debt has been paid off. If this is an option, your cosigner may have to sign a form to exercise it.

Pay it Off

Not everyone can afford to do this, but if it’s possible, you could also pay off the loan. This will release your cosigner from responsibility on the loan. Plus, you’ll also have the added benefit of being done with your monthly car loan payments. And you may save the interest you were paying (though check for early payment fees)!

The Takeaway

When you’re ready to remove a cosigner from your car loan, go about it strategically. Talk to your cosigner about the removal and decide which option seems like the most practical choice.If you’re looking for an auto loan refinance as a way to remove your cosigner from your loan, Lantern Credit can help. By filling out one simple form, you’ll be able to compare and contrast offers from multiple lenders in our network so that you can make the decision best for you. 
Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website on credit (https://www.consumer.ftc.gov/topics/credit-and-loans)The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.SOLC0621100

Frequently Asked Questions

What is the role of a cosigner?
Can you refinance a car to remove the cosigner?
Can a cosigner be removed from a car loan?
What is a cosigner release option?

About the Author

Susan Guillory

Susan Guillory

Susan Guillory is the President of Egg Marketing, a content marketing firm based in San Diego. She’s written several business books, and has been published on sites including Forbes, AllBusiness, and Cision. She enjoys writing about business and personal credit, financial strategies, loans, and credit cards. Follow her on Twitter @eggmarketing.
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