Joint Auto Loans vs Cosigned Car Loans

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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 - March 3, 2021

Sometimes, you need a little help from your friends to get into a big item like a vehicle. Cars can be pricey, and in some cases, someone else may be your answer to getting approved for vehicle financing.

Cosigner or Co-Borrower?

There’s a common misconception that cosigners and co-borrowers are the same things, but that couldn’t be further from the truth.

Co-borrowers get their name on the loan and vehicle title and help you make payments. A car loan with a co-borrower is commonly called a joint auto loan.

Cosigners, though, help you get approved for the loan by lending you their good credit score and promising to repay the loan if you can’t – they aren’t there to help you make payments each month. They’re a backup payer.

Adding someone else to your auto loan application can help you get approved for vehicle financing. However, they help in different ways.

Key Differences Between a Co-Borrower and a Cosigner

Co-borrowers:

  • Are typically spouses or life partners
  • Combine their income with yours on the auto loan application
  • Have shared rights to the vehicle
  • Share responsibility for the loan
  • Credit scores are considered along with yours

Cosigners:

If more income is what you need to get an auto loan approval, and you have a spouse or life partner, then a joint car loan could fit your situation.

If your credit score is worse for wear and you need help with the credit score stipulations of a lender, then a cosigner could be your answer. Anyone can be a cosigner – family member, friend, acquaintance – with the exception of your spouse since they typically become a co-borrower instead.

Can You Remove Someone From a Joint Auto Loan?

Yes, there are two ways to remove a co-borrower from a joint auto loan. The same methods can be used to remove a cosigner, as well. Removing someone from your car loan either means refinancing or selling the car.

If you want to keep the vehicle, then refinancing is a good solution. Refinancing is when you replace the car loan with another one. If you have a co-borrower, you need their permission to refinance since they have rights to the vehicle. When you have a cosigner, you can refinance the auto loan alone without their permission – but it’s probably nicer to give them a heads up since they have an obligation to repay the loan if you falter.

To refinance, there has to be equity in your car. This means you owe less on the auto loan than the value of the vehicle. Many lenders also require that the vehicle doesn’t have more than 100,000 miles on it and that it’s less than 10 years old.

Another solution, although maybe not ideal, is selling it. If you have a joint car loan, you need the other co-borrower’s permission to sell it. You don’t, however, need a cosigner’s permission to sell it, and they don’t have to present for the sale (a co-borrower likely needs to be there to sign the title).

Selling the vehicle and paying off the loan ends the contract, so co-borrowers are free from the contract and a cosigner is relinquished of their responsibility to the loan.

Need to Go it Alone?

Having someone else to help you get approved for vehicle financing is a big advantage – but it’s not one that everyone has. For many borrowers, finding someone to cosign or start a joint auto loan isn’t possible. However, you’re not out of options just yet if you haven’t considered a subprime car loan.

Subprime lenders specialize in helping borrowers with credit challenges. Your credit score isn’t the most important factor for subprime financing eligibility – your ability to pay and your overall financial stability are examined.

Getting approved for a subprime auto loan means proving you’ve got income, a stable living situation, and a down payment. Even if you’ve had credit issues in the past, a subprime lender that’s signed up with a special finance dealership could be your ticket to vehicle financing.

Find a Dealer With Us!

Here at CarsDirect, we want to help you skip the search for a dealership. We’ve created a nationwide network of dealers that are signed up with subprime lenders, and we want to bring those connections directly to you.

Complete our free auto loan request form, and we’ll look for a dealership in your local area at no cost, and with no obligation.

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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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