Do I Need My Cosigner to Refinance My Car?

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Meghan Carbary has been writing professionally for nearly 20 years. A published journalist in three states, Meghan honed her skills as a feature writer and sports editor. She has now expanded her skill-set into the automotive industry as a content writer for Auto Credit Express, where she contributes to several automotive and auto finance blogs.


, - June 27, 2018

When you’re getting an auto loan with poor credit, lenders often require you to have a cosigner to give your credit situation a boost. This may not be optimal for everyone, and may leave you wondering, “am I stuck with this cosigner for as long as I have my car”?

The Role of a Cosigner

The good news is that you’re not likely to be stuck with a cosigner forever. A cosigner’s role in auto financing is to basically “lend” you their good credit along with the promise to pick up the slack if you drop the ball on your payments. Cosigners don’t get any ownership rights to the vehicle, but their credit is tied to your loan. So, your repayment habits, both good and bad, affect your credit and theirs.

Basic Principles of Refinancing

If you want to remove your cosigner, refinancing is usually the only accepted method for doing so. The process of refinancing is pretty simple. All you’re doing is replacing your current loan with a new loan, possibly with better rates and terms, and typically with no cosigner. In order to refinance, your credit has to have improved since taking out the original loan, and you still need to meet all the lender requirements for taking out a loan – after all, that’s what you’re doing.

Typically, you need to shop around for a different lender in order to get different rates and terms for your loan. If you have a cosigner, there’s usually no need for them to come with you, since they don’t have any ownership rights over the car. Once you refinance, your cosigner will automatically be released from the loan.

Removing a Cosigner from an Auto Loan

With a solid history of on-time payments, your credit should improve enough for you to go it alone in two or three years (as long as the rest of your credit looks good). If your loan is longer than that, however, you’ll have to refinance your car in order to remove the cosigner from the loan. Hopefully you’ll get a better interest rate while you’re at it, too.

If you aren’t able to refinance, you can talk to your current lender. In rare cases, if you have enough positive payment history, and your credit has improved enough to stand on your own, your lender may agree to remove your cosigner in a set amount of time before you’re done paying off your loan.

Make sure you don’t confuse a cosigner with a co-borrower. These things may sound similar, but they’re very different when it comes to the world of auto financing. The processes involved in removing a co-borrower can be very different from that of a cosigner, because a co-borrower does have equal ownership rights to the vehicle.

The Bottom Line

You have to meet all of the lender’s qualifications to go it alone on a car loan. If your credit is a little lower than they’d like, a lender may require a cosigner. If that was the case, but now you think your credit has improved enough that you no longer need one, you’ll have to refinance the loan to remove the cosigner.

If you need a new loan and you’re ready to do it on your own but don’t know where to go, CarsDirect wants to help. We work with a nationwide network of special finance dealers that have the lending resources to handle any credit situation. All it takes to get started is simply filling out our easy online auto loan request form.

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Meghan Carbary has been writing professionally for nearly 20 years. A published journalist in three states, Meghan honed her skills as a feature writer and sports editor. She has now expanded her skill-set into the automotive industry as a content writer for Auto Credit Express, where she contributes to several automotive and auto finance blogs.


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