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 smarter financial decisions by providing you with interactive tools and financial calculators as well as publishing high-quality and impartial content. We also allow you to conduct your own research and compare information for free – so that you can make informed financial decisions. Bankrate has agreements with issuers, including but not limited to, American Express, Bank of America, Capital One, Chase, Citi and Discover. How We Earn Profit The products that are featured on this website are provided by companies that pay us. This compensation could affect how and where products appear on the site, such as, for example, the order in which they appear within the listing categories in the event that they are not permitted by law. Our mortgage, home equity and other home lending products. This compensation, however, does have no impact on the information we publish, or the reviews you see on this site. We do not contain the vast array of companies or financial offers that may 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 end of 2021. They are dedicated to helping their readers to take control of their finances by providing clear, well-researched information that breaks down otherwise complex topics into manageable bites. The Bankrate guarantee
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There could be a conflict between primary borrower and the co-signer may be strained, or the finances of the co-signer could change and, in turn, the co-signer wants to walk away from the arrangement. Although it is possible to withdraw benefit from the loan just by changing one co-signer to another one on the original loan is not likely. The procedure is more complicated and may involve refinancing the loan or completing co-signer releases paperwork or simply paying the loan in full to stop the co-signer’s involvement. You won’t be able to simply replace your existing auto loan co-signer Most lenders won’t just swap a current co-signer with a new one on an existing car loan because it would require them to essentially undergo the approval process for a . While it never hurts to inquire with the lender about this possibility, swapping one co-signer to another for an existing loan is not standard practice. This procedure is typically confined to the terms and conditions of a loan and is not designed or intended to alter the parties that signed on to the loan. Refinancing can eliminate a co-signer from your vehicle loan and permit a new one Yet another option to eliminate a cosigner of an auto loan is to simply . That is, you can create a new loan that pays off the current loan’s balance and closes the loan. The new loan is able to be opened through an entirely new lender and may be opened without co-signer involvement. In some instances it could be possible to open the loan with the same lender but this isn’t always feasible. In order to do this, however you’ll need to be able to qualify for an entirely new loan on your own that requires a great credit score and a track record of paying. If you’ve had a problem since first purchased the vehicle, refinancing may also present an opportunity to obtain a more competitive interest rate or to modify loan repayment terms. Bankrate’s tip: If your credit rating isn’t up to scratch, you might consider finding an individual you trust and are comfortable asking to co-sign for a new loan. The removal of the co-signer on your auto loan is an option. While not all lenders offer this option, it’s possible in some cases to eliminate a co-signer through making a co-signer release. Contact the lender The first step is to communicate directly with the lender who financed the loan and find out whether it offers a co-signer release option. Complete the required paperwork: If you find that the lender provides a release option then you’ll typically have to sign a form that removes co-signers from the loan and is the borrower who is accountable for the repayment of the loan. Only the primary borrower has the right to change the terms of the loan. Approval of the lender: There is no assurance that the lender will be able to approve the release of the co-signer. You must prove that you are able to manage the loan on your own by proving you have a satisfactory credit score and the financial resources to maintain repayment. If you decide to make this change, your loan period could be altered. The removal of a co-signer can affect the interest rate on your loan, particularly when the loan was originally approved based on the co-signer’s credit score. The final word is that switching or removing a co-signer on an auto loan is not as simple or as simple as it sounds. In most cases, you’ll need to , pay it off altogether or proceed with making a co-signer releasedepending on whether the lender even provides this option. Consider carefully whether you want anyone to co-sign on a loan for you, in the first place and be sure you select one you can trust. Learn more about
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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. Written by Rhys Subitch Edited by Auto loans editor Rhys has been editing and writing for Bankrate since the end of 2021. They are passionate about helping readers feel confident to control their finances by providing precise, well-studied information that break down complicated topics into digestible pieces.
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