App version: 0.1.0

Can You Remove a Cosigner From a Car Loan?

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.
Susan Guillory
Susan GuilloryUpdated February 7, 2024
Share this article:
Editor’s note: Lantern by SoFi seeks to provide content that is objective, independent and accurate. Writers are separate from our business operation and do not receive direct compensation from advertisers or partners. Read more about our Editorial Guidelines and How We Make Money.
Yes, you can remove a cosigner from your car loan. Whether you’re in a better financial situation or you simply want the cosigner off of the loan, it is possible to refinance your vehicle in your own name as long as you meet the qualifying criteria on your own.Keep reading to learn more on what a cosigner is and how to remove a cosigner from your auto loan.

What Is a Cosigner?

A cosigner is someone who signs a loan with you and will be held responsible for paying it off if you stop making the payments. When taking out a loan, lenders will 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.However, a cosigner can help you qualify for the loan. They usually are 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. Recommended: Car Loan Cosigner Requirements

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 and stable income. 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?

Before trying to remove a cosigner for your auto loan, you need to make sure that the person was actually a cosigner on the loan and not a co-borrower, as there are distinct differences between the two.

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 on 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?

Yes, you can remove a cosigner from a car loan.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 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. 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 your car could be the easiest and most beneficial way 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 be wondering how many times you can refinance your 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, as 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 have the added benefit of being done with your monthly car loan payments. 

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 by SoFi 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 best decision for you.

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

Su Guillory is a freelance business writer and expat coach. She’s written several business books and has been published on sites including Forbes, AllBusiness, and SoFi. She writes about business and personal credit, financial strategies, loans, and credit cards.
Share this article: