Co-signing as opposed to. co-owning a vehicle: Which is better? Advertiser Disclosure Advertiser Disclosure We are an independent, advertising-supported comparison service. Our mission is to help you make better financial choices by offering interactive financial calculators and tools as well as publishing objective and original content. This allows you to conduct research and compare information at no cost and help you make sound 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 money The products that appear on this site are from companies who pay us. This compensation may impact how and where products appear on the site, such as for instance, the order in which they appear within the listing categories and other categories, unless prohibited by law. This applies to our loan products, such as mortgages and home equity and other products for home loans. But this compensation does affect the content we publish or the reviews appear on this website. We do not include the entire universe of businesses or financial deals that could be open to you. FG Trade/Getty Images

2 min read published October 28, 2022

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Written by Bankrate Written by The article was created with the help of automation technology, and then verified and edited by an editor on our editorial team. Edited by Rhys Subitch Edited by Auto loans editor Rhys has been writing and editing for Bankrate since the beginning of 2021. They are committed to helping readers feel confident to control their finances by providing precise, well-studied information that breaks down complex subjects into bite-sized pieces. Written by Mark Kantrowtiz and reviewed by Nationally well-known expert in student financial aid Mark Kantrowitz is an expert on financial aid for students as well as the FAFSA, 529 plans, scholarships educational tax benefits, as well as student loans. The Bankrate promises

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This compensation could influence the manner, place and in what order products are listed, except where prohibited by law. This is the case for our mortgage, home equity and other products for home loans. Other factors, like our own proprietary website rules and whether the product is available within your area or at your personal credit score can also impact how and where products appear on this website. We strive to offer the most diverse selection of products, Bankrate does not include specific information on every credit or financial item or product. Co-signing and co-owning a car are two different ways to approach applying for the loan with another borrower. In both cases the second borrower must to have sufficient credit and earnings to be able to fund this loan independently. Each has advantages and drawbacks, based on what both parties are looking for. There are some differences between a co-signing or co-owning of vehicle. A co-signer is someone who is accountable for the repayment of the loan however, they don’t own any legal rights to the car. Co-owners have equal rights to the vehicle. Co-signing a car loan in the case of an automobile co-signer, they agree to take on the monthly installments in the event that the borrower can’t make these payments. This is a big decision to make and will . Benefits of co-signing an auto loan Assistance in qualifying: A co-signer can get an auto loan they otherwise wouldn’t be qualified for. Build credit If the primary borrower can remain on top of their payment, the credit of co-signers and co-signer may be improved. Reduce costs: If the co-signer has a very good or excellent credit score and the primary borrower is in good standing, they can be eligible for a lower fee and interest rate. Risks of co-signing on an auto loan the responsibility for payment: If the borrower defaults, the co-signer is in charge of the entire loan payments. Legally insolvent: The co-signer is not in the title of the car and has no legal rights to the car. Co-ownership of a vehicle is a legal option. In the case of a vehicle, both the owner and co-owner are listed as co-owners on the title. The fact that a co-owner is listed doesn’t change what is already clear that the principal borrower has the title to the property. Based on the way in which the vehicle is registered and the primary borrower might require approval before they are able to sell the car. Benefits of co-owning a car Safety for co-owner: The co-borrower has the protection of having their name on the title. Better terms: If both borrowers have strong credit the primary borrower could be extended more favorable conditions than if they were applying on their own. Risks of co-owning a car equal Rights: Each co-borrower is granted equal rights to the car as the primary borrower. This means the co-owner must take part in sale or transfer of the vehicle. Insurance If the co-owner does not use the car, they’ll likely have to be covered by the insurance policy. This could mean more expensive costs for the two parties concerned. How to choose between co-signing or co-owning a car The main difference between co-signers and coborrowers is the level of investment in the loan. Co-borrowers have more responsibility and responsibility than co-signers. Co-borrowing is a good option for those who both have good credit and want equal rights to the vehiclelike a couple that wants to buy a car together. However, it is not recommended it is a good option for someone who wouldn’t qualify for the loan at all, or requires assistance in obtaining an amount that is larger or with a low interest. How to prepare for co-signing or co-owning the car. To be co-signer on the loan it is necessary to have a steady income and meet the credit score requirement that is set by the lender. This is the same for being a co-owner because the credit score of both the people who are borrowing is taken into consideration. Even if you meet the criteria, an open conversation should be had between both parties. Co-signing and co-owning both come with significant credit risk. Make sure there is an insurance plan to cover the case that the principal borrower is unable to pay. The bottom line is that there are many reasons why you could choose to co-sign or purchase a car with another person. In either case it is crucial for both of you to be on the same page regarding what their relationship is about and what’s expected of both of you. Find out more


The article was written by produced using automation technology, and thoroughly edited and fact-checked by an editor from our editorial staff. Editor: Rhys Subitch Edited by Auto loans editor Rhys has been editing and writing for Bankrate from late 2021. They are passionate about helping readers gain the confidence to manage their finances through providing precise, well-researched and well-researched information that breaks down otherwise complex topics into manageable bites.

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Review by Mark Kantrowtiz by Nationally recognized student expert in financial aid Mark Kantrowitz is an expert on financial aid for students including the FAFSA, 529 plans, scholarships, education tax benefits along with student loans.

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