What Does the Term "Co-Buyer" Mean?

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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.

, - May 14, 2019

A co-buyer, also called a co-borrower, is usually a spouse who signs the car loan documents with the primary borrower. Being a co-buyer means both the primary borrower and their spouse share equal rights to the vehicle, and they can combine incomes to qualify for an auto loan. Although it sounds similar, being a co-buyer isn’t the same as being a cosigner.

Co-Buyer vs. Cosigner

In order to understand the difference between a co-buyer and cosigner, let’s break down their roles and what they can and can’t do for a car loan.

A co-buyer helps the primary borrower get approved for auto financing if they lack a qualifying credit score, just like a cosigner. However, unlike a cosigner, a co-buyer can help the primary borrower with the qualifying income needed for approval.

Co-buyers can combine incomes, and both of their names appear on the car's title. If one borrower misses a payment, the other is responsible for coming up with it, and both of their credit scores and credit reports are affected.

A cosigner, on the other hand, doesn’t have any rights to the vehicle. A cosigner’s typical role is to allow the primary borrower to qualify by throwing their good credit into the mix. In some cases, a cosigner can be used if the primary borrower doesn’t have an income that can be garnished, but this varies by lender and situation.

Just like a co-buyer, if the primary borrower misses a payment, the cosigner becomes responsible for paying and their credit is affected. However, their income can't be combined with the primary borrower's, and their name doesn't appear on the title.

Adding or Removing a Co-Buyer

If you’re in the middle of a bad credit auto loan, it's possible that your situation has changed since you first took out the loan. If this is the case, before you consider giving up on your current car, consider a co-buyer. You can add or even remove a co-buyer from an existing loan through refinancing.

Refinancing requirements vary by lender, but most like to see that a few years have passed since taking out the car loan, and that your credit score has improved. Both you and the co-buyer have to contact your lender, or a new lender, together to begin this process.

When adding a co-buyer to your auto loan, you need to qualify for refinancing and the co-buyer needs to qualify for the loan, as well. To remove a co-buyer is a different story.

First, you need to determine if you’re able to qualify for financing on your own. You can try for pre-approval at your local bank or credit union, or rate shop to compare rates and terms with different lenders.

Once you know for sure you can assume the auto loan on your own, you and the co-buyer both have to sign the title at your local DMV or Secretary of State. From there, you can complete the car financing process by signing the loan documents and applying for a new title and registration.

Ready to Find Financing?

Qualifying for a bad credit auto loan isn’t always easy. While you may meet basic requirements when it comes to residence and down payment, sometimes, your income doesn’t quite meet the lender’s requirements. In this case, a co-buyer could be a great way to get approved for financing – you may even be able to qualify for better loan terms.

If you have a co-buyer ready and you just need help finding a dealership to work with, we’ve got you covered. At CarsDirect, our nationwide network of special finance dealers has the lending specialists to help people in many types of credit situations. We can help you by making your search for a lender easy – just fill out our free, no-obligation car loan request form, and we'll get the process started right away!

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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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