What is a Joint 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.


, - January 4, 2019

A joint auto loan is when two people – typically spouses – sign a contract and agree to share a car loan. There are many benefits to having a joint applicant on an auto loan, but removing them could get tricky if things go south. Before you and your spouse agree to a joint car loan, continue reading to see the shared responsibilities being a joint applicant means.

Cosigners vs. Co-borrowers

The first thing you need to know is that a co-borrower isn’t the same as a cosigner. Co-borrowers, or joint applicants, share ownership of the vehicle and, because joint applicants are usually married, their incomes are added together to meet the lender's income requirement, and both names are listed on the title. Cosigners, on the other hand, don’t have any ownership rights to the car, but, like co-borrowers, they’re still equally responsible for the auto loan, and are required to make loan payments in the event the primary borrower is unable to.

Both cosigners and co-borrowers can increase the odds of getting approved for a loan. However, unlike joint applicants, whose incomes can be added together to meet a lender's income requirements, a cosigner must meet the income requirements as an individual, as well as have good to excellent credit.

Benefits of Adding a Co-borrower

There are three big benefits to adding a co-borrower to a car loan:

  1. Comingle funds – If you can’t qualify on your own because your income is too low, but together you and your spouse have enough income, you can add your spouse as a co-borrower to the loan to qualify for the income requirement.
  2. Could get a lower interest rate – If your co-borrower has a better credit score, you might qualify for a better interest rate and save money on interest charges.
  3. Could take on a larger loan – You could qualify for a bigger loan with the additional income of the co-borrower.

Removing a Joint Applicant

In the event you and the co-borrower no longer want to share a car loan, such as in a divorce, how can you remove them or yourself? Because an auto loan is a binding contract, the only way you can remove a joint applicant (or add one) is by refinancing the current loan. In order to refinance, you can’t be upside down in the loan, and you or your new cosigner must have good credit.

Ready to Find Financing?

If you have a joint applicant, or even a cosigner, and are ready to sign on a car loan, but don’t know where to start searching for financing, let CarsDirect help. We work with an extensive network of special finance dealerships that have subprime lending resources available. It’s simple to fill out our online auto loan request form and begin the process. Our service is free of cost and obligation, so get started 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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