How to get a cosigner off a car loan
Let's face it, car loans can be expensive. Regardless of whether you are in a good place financially or not, auto loans can be a daunting bill to have to pay. This is why a lot of people seek out a co-signer to help with the loan payments. A co-signer is someone who signs up with the primary borrower to take on the financial responsibility of the loan. If the primary borrower is unable to make the payments, the responsibility will fall on the co-signer and they will have to pay off the rest of the loan.
Getting a cosigner on a loan is a smart move, especially if you are struggling financially, but what if you want to get rid of your cosigner? Getting a cosigner off the loan is absolutely possible, but it can be a difficult process.
Why have a cosigner?
As mentioned, a cosigner gives you a safety net if you are unable to make your car loan payments on time. Another big reason to have a co-signed loan is that it gives the lender and the bank confidence that the loans they are distributing will be paid back to them. Usually, someone gets a cosigner because they do not have a good credit score, they have difficulties making the monthly payments, or other specific circumstances that have to do with money or debt.
You want a cosigner that has a good payment history, a good credit score, and someone that has a good income so they can handle the financial responsibility to pay back the car loan amount just in case you are unable to. So keep in mind if you are getting rid of a cosigner on your loan, you become solely responsible for your payments and it could affect your credit score, or even repossession on your car, if you do not make timely payments.
Why remove a cosigner?
There are plenty of reasons to get rid of a cosigner on a loan. Your cosigner could be in financial hardships and in that case, it would be best for not only their credit score, but your own to get them removed from the car loan. You and the car loan cosigner could have had a falling out and both parties want to part their separate ways. Regardless of the reason, there are three main ways to get rid of a co-signer. If you follow these steps, you will know how to get a cosigner off a car loan.
Removing your cosigner
Pay off the loan
This one is the easiest option of the three. Let's say when you were first looking for an auto loan your financial status wasn't the greatest and you needed a co signer to fulfill the loan needs. Time has passed and your finances are looking good. So, you want to get rid of the burden for the other borrower and decide that you can pay off your auto loans instead. paying it in full releases both you and the other borrowers from making any more payments.
Even if you cannot pay off the car loan in full, paying a good amount of it will ease some of the burden on the cosigner. Though this option may not be for everyone considering you need to pay a large amount at one time.
Even if you cannot pay off the car loan in full, paying a good amount of it will ease some of the burden on the cosigner.
Contact your lender and ask them about a cosigner release. Usually, most lenders have very specific circumstances as to how you can get the cosigner to release the auto loan. Typically, lenders will look for on-time payments and some may require you to hit a certain number before you can remove the cosigner. They also make sure that they are not the primary borrower, meaning the person who wanted the loan in the first place.
And lastly, if the cosigner's credit score has not dropped significantly, this gives the lenders more confidence that you can pay for your loans on your own. Though be warned because some lenders do not offer a cosigner release, so talk to a few lenders about their cosigner policies.
Refinance the loan
One other way that you could remove a cosigner from a car loan is to refinance your original auto loan with a new loan. This process can be an effective way to get a cosigner off the original loan and have it in your own name. Refinancing a loan means that you seek out a new loan to pay off your original loan. Refinancing can help both borrowers in the long run. Luckily you are in the right place for this option, as you can ask a RateWorks professional for more help on refinancing!
It helps the cosigner from financial strain because they are no longer liable to pay a monthly payment or any late payments you may have missed and it helps the original loan borrower because you may be able to negotiate a better loan payment. This means you can ask for smaller monthly payments, a lower interest rate, and you can even help your own credit history by making these payments by yourself.
Refinancing a loan does not mean you do not have to pay off the loan you previously had, it just means that you can get a new loan that can pay off your original loan balance at a more doable monthly payment. If you qualify for the new loan, then you can remove the cosigner from a car loan and it becomes your loan and the car's title goes in your name.
Removing a cosigner from a car loan
So there you have it, that is how you remove a co-signer from your auto loan. Just remember that if you did need to get rid of your cosigner, you could pay the amount still owed on your car auto loan in full, contact your lender about a cosigner release, and if you absolutely need to, you can also seek out a new lender to refinance the loan and a get a new auto loan contract. It's also a good idea to have a good relationship with your cosigners and treat them well. That's the best advice that can be given.