Co-Borrower’s Rights on a Car Loan

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Contributing Writer

Bethany Hickey is a graduate from the University of Michigan-Flint, with a bachelor’s in English-Writing. She is a content writer for Auto Credit Express, CarsDirect, and many other automotive blogs, as well as the Poetry Editor for UM-Flint’s writing magazine.


, Contributing Writer - August 10, 2021

When you share a car loan with someone else, called your co-borrower, you both have shared responsibility for making payments and managing the joint auto loan.

Rights on Joint Auto Loans

On a joint car loan, co-borrowers have equal rights and responsibilities to the loan and the vehicle.

This means:

  • You can’t sell the car without their permission and vice versa.
  • The lender can ask either co-borrower to make payments, regardless of the payment arrangements made between you.
  • Both of your credit reports are impacted by the activity on the loan.

Additionally, if you need to sell a vehicle with a joint auto loan, it’s very likely that both co-borrowers need to be present for the sale. Most vehicle titles require both borrowers to sign the title to transfer ownership to a buyer. And, if one borrower sells the car without the other's permission, there could be legal consequences.

In most cases, co-borrowers are spouses. Spouses often apply for a car loan together to try to qualify for a larger loan amount, and so both borrowers get their names on the vehicle’s title. Since spouses may have combined expenses and resources, lenders typically require co-borrowers to be life partners or spouses.

It’s a good idea to make sure both of you are on the same page when it comes to the status of the loan and future plans for the vehicle since you’re both impacted by and share the responsibility for the car.

Can a Co-Borrower Help Me Get a Car Loan With Poor Credit?

Co-borrowers combine incomes, not credit scores. When you apply for a joint auto loan, typically, the lower credit score of the two is the one that’s used to meet the requirements of a lender. If you have poor credit but your intended co-borrower has great credit, your low credit score may be used to determine the rates and terms of the loan you qualify for.

If you need help meeting credit score requirements, then a cosigner is likely a good bet. Cosigners lend their good credit score to help you meet lender requirements and lower may lower your chance of default since they promise to repay the loan if you’re unable to. However, cosigners don't have the same rights to the vehicle, and their name isn't listed on the car title like a co-borrower is.

Do Co-Borrowers and Cosigners Have the Same Rights?

No, a cosigner doesn’t have the same rights to a vehicle as a co-borrower. A co-borrower is a co-owner of the vehicle. A cosigner, on the other hand, only has a responsibility to make payments on the loan if the primary borrower is unable to pay. Their main purpose is to assist the primary borrower to qualify for a car loan.

Cosigners don’t get their name on the title of the vehicle, can’t take or sell the car (which is considered theft since it isn’t their car), and aren’t required to be present for the sale of the vehicle.

However, cosigners are impacted by the activity on the loan, just like a co-borrower. If the primary borrower misses a payment, it’s reflected on both of your credit reports. This means that if all payments are timely and the loan is managed well, both parties can end the loan with better credit scores and healthier credit reports, no matter if they're a cosigner or co-borrower.

In Need of a Vehicle?

Sometimes, having a co-borrower or cosigner just isn’t enough to qualify for a car loan. In many cases, bad credit borrowers need the assistance of a subprime lender to get the vehicle they need.

Let CarsDirect lend a hand with your next auto loan. We’ve created a coast-to-coast network of special finance dealerships that specialize in credit challenges. Don’t get your poor credit score stand in the way of your next car loan – fill out our free auto loan request form and we’ll look for a dealer in your local area!

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, Contributing Writer

Bethany Hickey is a graduate from the University of Michigan-Flint, with a bachelor’s in English-Writing. She is a content writer for Auto Credit Express, CarsDirect, and many other automotive blogs, as well as the Poetry Editor for UM-Flint’s writing magazine.


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