Can You Remove a Cosigner from an Auto Loan?

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Megan Foukes is a recent graduate from Indiana University who graduated with a bachelor’s in journalism. Megan works as a content writer for Auto Credit Express and contributes to several automotive and finance blogs.

, - March 21, 2019

You can definitely add, or even remove, a cosigner from an auto loan. How you go about doing this is by refinancing your current loan. Although we aren’t lenders, we can help by giving you some tips and explain the car refinancing process.

How to Remove a Cosigner From an Auto Loan

If you took out a bad credit auto loan with a cosigner, but are now in a better position to handle the loan yourself, you may be able to remove them by refinancing. Your cosigner can’t remove themselves from the loan, so it’s up to you.

In order to refinance a car loan, you typically need to make sure at least two years have passed since taking out the initial loan, and have established a positive payment history. This means your credit scores should have improved, as well.

You also need to make sure you meet the refinancing requirements before you look for a lender to work with, and that you can handle the auto loan without your cosigner. Car refinancing comes with many benefits, especially if you had bad credit to begin with. You could qualify for a better interest rate and lower your monthly payment.

On the flip side, if you need to add a cosigner to your auto loan, you could do that by refinancing, too. You just need to make sure your potential cosigner meets the basic car loan requirements and is aware of their role.

Removing a Co-Borrower

If you have a co-borrower instead of a cosigner on an auto loan, how do you remove them? It isn’t the same process as having a cosigner and simply refinancing, and takes some extra steps.

Because a co-borrower shares equal rights to the vehicle, and their name is listed on the title, you need to make sure that you can qualify for a brand new car loan on your own. Make sure you double check your credit and budget ahead of time.

From there, you and the co-borrower need to visit your local DMV or Secretary of State. When you get there, you both need to sign the title. Once it’s signed, you can apply for a brand new title and registration by yourself.

Why can’t you just go to the DMV or Secretary of State and remove a co-borrower? The problem is if you, the primary borrower, visit the DMV or Secretary of State before you get approved for refinancing, and the co-borrower is removed from the title, the co-borrower then becomes a cosigner until the loan is refinanced.

If you end up being unable or unwilling to refinance the loan, the once-co-borrower-and-now-cosigner is stuck on the loan. They no longer have any rights to the vehicle but are still responsible for the loan. This could put them in an even more difficult situation than before.

The Bottom Line

No matter if you’re planning on adding or removing a cosigner, it’s important you understand the process of auto refinancing.

On the other hand, if you’re starting from square one, and need a bad credit car loan, CarsDirect can help you get that process started.

We work with dealerships all across the country that specialize in helping borrowers in many types of credit situations. We can match you with a dealer near you that has the lending resources available to help you get financed. Get started by filling out our free and easy auto loan request form today.

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Megan Foukes is a recent graduate from Indiana University who graduated with a bachelor’s in journalism. Megan works as a content writer for Auto Credit Express and contributes to several automotive and finance blogs.

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