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 aim is to assist you make better financial decisions by offering interactive tools and financial calculators as well as publishing high-quality and impartial content. We also allow users to conduct research and compare information at no cost and help you make financial decisions with confidence. Bankrate has agreements with issuers such as, but not limited to, American Express, Bank of America, Capital One, Chase, Citi and Discover. How We Make Money The offers that appear on this website come from 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 may be listed within the categories of listing and other categories, unless prohibited by law for our mortgage or home equity products, as well as other products for home loans. However, this compensation will affect the information we publish, or the reviews that appear on this website. We do not cover the entire universe of businesses or financial deals that might be open to you. SHARE: Tony Anderson/Getty Images
2 min read published 12 September 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 with precise, well-researched and well-written information that breaks down complicated topics into bite-sized pieces. The Bankrate guarantee
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This compensation could influence the manner, place and when products appear within listing categories and categories, unless it is prohibited by law. We also offer credit, mortgage, and other home lending products. Other factors, like our own rules for our website and whether the product is available in your area or at your own personal credit score may also influence the manner in which products appear on this website. While we strive to provide a wide range offers, Bankrate does not include details about every financial or credit product or service. Making a deal with a co-signer may seem like a good idea initially however, in certain instances it may not go as planned. It is possible that the relationship between principal borrower and co-signer might change, or the finances of the co-signer might change and, consequently, the co-signer wants to walk away from the arrangement. While it is possible to get out of a loan but replacing one co-signer with an additional one on the initial loan is not likely. The procedure is more complicated and could include refinancing the loan, completing co-signer release documents or paying off the loan in full to stop the involvement of the co-signer. It’s not possible to just replace your current auto loan co-signer. Most lenders will not simply replace a current co-signer with a new one on an existing vehicle loan since it will require that they go through the approval process for the swap . While it never hurts to ask the lender about this possibility changing one co-signer with another on an existing loan is not a standard procedure. This procedure is typically confined to the conditions and terms of a loan and is not intended or meant for modifying the parties who signed on to the loan. Refinancing could eliminate a co-signer from your vehicle loan and permit a new one Yet another option to eliminate a cosigner for an automobile loan can be to just . In other words, make a completely new loan that pays off the existing loan’s balance and closes the account. The new loan could be opened by the help of a new lender and can be done without the involvement of the co-signer. In some instances, it may be opened by the same lender but it’s not always feasible. In order to do this, however you’ll need to be eligible for a new loan by yourself and this requires a high credit score and a track record of paying. If you’ve been in the process of purchasing the car refinancing could provide an opportunity to obtain the most competitive interest rate or revised loan payment terms. Bankrate tip: If your credit score isn’t up to scratch, you might consider finding someone you can feel confident in asking them to sign on a new loan. Removing the co-signer from your auto loan is an option. Though not all lenders offer this option, it’s possible in certain cases to eliminate a co-signer through making a co-signer release. Contact the lender: Your first step is to communicate directly with the lender who funded the loan and inquire if they offer a release for co-signers option. Fill out the necessary paperwork: If the lender provides an option to release the loan then you’ll typically have to fill out paperwork that strips the co-signer of the loan and is the borrower who is accountable for the paying back the loan. Only the borrower who is the primary one is able to alter the terms of the loan. Approval of the lender: There is no guarantee the lender will approve the release of the co-signer. You must prove that you can handle the loan by yourself by proving you have a satisfactory credit score and the financial resources to maintain repayment. If you make this modification, your loan duration could be modified. Removing a co-signer could affect the interest rate on your loan, particularly when the loan was initially accepted based on co-signer’s good credit. The final word is that switching or removing a co-signer on the car loan isn’t as easy or as simple as it seems. Often, you will need to , pay it off altogether or go through the process of signing a release of co-signer -in the event that the lender even allows this option. Think carefully before asking someone to co-sign 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. Edited by Rhys Subitch Edited by Auto loans editor Rhys has been writing and editing for Bankrate since the end of 2021. They are dedicated to helping their readers to manage their finances with concise, well-studied and well-researched content that break down complicated subjects into bite-sized pieces.
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