What to know about switching co-signers on a car loan Part Of Financing a Car With a Co-Signer In this series Financing a Car With a Co-Signer Advertiser Disclosure Advertiser Disclosure We are an independent, advertising-supported comparison service. Our goal is to help you make better financial decisions by providing you with interactive tools and financial calculators as well as publishing high-quality and impartial content. This allows users to conduct research and compare information at no cost to help you make sound financial decisions. Bankrate has partnerships with issuers including, but not limited to, American Express, Bank of America, Capital One, Chase, Citi and Discover. How We Earn Money The deals that are advertised on this website come from companies who pay us. This compensation can affect the way and where products appear on this website, for example, for example, the sequence in which they appear within the listing categories in the event that they are not permitted by law for our mortgage home equity, mortgage and other home loan products. This compensation, however, does have no impact on the information we publish, or the reviews you read on this site. We do not cover the universe of companies or financial offerings that could be available to you. SHARE: Tony Anderson/Getty Images
2 min read Published September 12, 2022
Written by Mia Taylor Written by Contributing Writer Mia Taylor is a contributor to Bankrate and an award-winning journalist who has two decades of experience and worked as a staff reporter or contributor for some of the nation’s leading newspapers and websites including The Atlanta Journal-Constitution, the San Diego Union-Tribune, TheStreet, MSN and Credit.com. Edited by Rhys Subitch Edited by Auto loans editor Rhys has been editing and writing for Bankrate since the beginning of 2021. They are passionate about helping readers feel confident to take control of their finances with clear, well-researched information that breaks down otherwise complex subjects into digestible pieces. The Bankrate promise
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Therefore, this compensation may influence the manner, place and when products appear within listing categories in the event that they are not permitted by law for our mortgage, home equity and other home loan products. Other factors, such as our own website rules and whether or not a product is available within your area or at your self-selected credit score range could also affect how and where products appear on this website. We strive to provide the most diverse selection of products, Bankrate does not include details about each financial or credit products or services. Entering with a can appear like the best idea in the beginning, but in some cases it may not go as planned. There could be a conflict between primary co-signer and the borrower could be strained or the financial situation of the co-signer could alter and as a result the co-signer might want to walk out of the deal. Although it is possible to withdraw from an loan, simply changing one co-signer to an additional one on the initial loan is unlikely. The procedure is more complicated and could include refinancing the loan, completing co-signer release paperwork or simply paying the loan in full to end the co-signer’s role. You won’t be able to substitute your existing auto loan co-signer Most lenders won’t just swap a current co-signer with a new one for an existing auto loan as it requires them to essentially go through the approval process to approve the swap . While it never hurts to ask your lender regarding this possibility, swapping one co-signer for another on an existing loan isn’t a common practice. The procedure typically is based on the conditions and terms of a loan and is not designed or meant for modifying the parties who agreed to the loan. Refinancing may remove a co-signer on your vehicle loan and allow for an entirely new loan. Another option to eliminate a cosigner from an auto loan is to simply . Also, make a completely new loan which settles the current loan’s balance and closes the account. The new loan can be opened with an entirely new lender and can be done without the co-signer’s involvement. In some instances it is possible to open it with the same lender but this isn’t always feasible. To accomplish this, however you must be able to qualify for the new loan by yourself, which requires a good credit score and a track record of paying. If you’ve had a problem since first buying the car refinancing could provide the chance to get an interest rate that is more competitive or to modify loan payment terms. Bankrate’s tip: If your credit score isn’t at par it is possible to find someone you can trust and are confident in asking them to sign for a new loan. Removal of the co-signer from your auto loan may be an option While not all lenders offer this option, it is possible in some cases to remove a co-signer by completing a co-signer release. Contact the lender The first step is to get in touch with the lender who has financed the loan and find out whether they have a co-signer release option. Make sure you have the proper paperwork in place: If the lender provides the option of release it is common to fill out paperwork that strips co-signers of the loan and will make you the principal borrower responsible for payment of the loan. Only the primary borrower has the right to make this change on the loan. Approval of the lender: There is no guarantee a lender will accept the release of co-signers. You will need to prove that you’re able to handle the loan on your own and have a good credit score and sufficient funds to continue repayment. If you decide to make this modification the loan duration could be modified. The removal of a co-signer can affect the interest rate on your loan especially if the loan was originally granted based on the co-signer’s good credit. The bottom line Switching or removing a co-signer on an auto loan isn’t as simple or straightforward as it sounds. Often, you will need to pay it off in full or follow the procedure of completing a co-signer release — if the lender even allows this option. Consider carefully whether you want someone to co-sign for a loan for you, in the first place and be sure you select one you can trust. Find out more
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Written by Contributing Writer Mia Taylor is a contributor to Bankrate and an award-winning journalist who has two decades of experience and worked as a staff reporter or contributor for some of the nation’s leading newspapers and websites including The Atlanta Journal-Constitution, the San Diego Union-Tribune, TheStreet, MSN and Credit.com. The article was edited by Rhys Subitch Edited by Auto loans editor Rhys has been writing and editing for Bankrate from late 2021. They are passionate about helping readers to control their finances through providing precise, well-studied information that dissects complicated topics into digestible pieces.
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