Co-signing as opposed to. co-owning a vehicle: How do you tell the differences? Advertiser Disclosure Advertiser Disclosure We are an independent, advertising-supported comparison service. Our goal is to help you make better financial decisions by offering interactive tools and financial calculators that provide objective and unique content. We also allow users to conduct research and compare information for free – so that you can make sound financial decisions. Bankrate has agreements with issuers including, but not restricted to, American Express, Bank of America, Capital One, Chase, Citi and Discover. How We Make Money The deals that are displayed on this website are provided by companies that compensate us. This compensation can affect the way and when products are featured on this website, for example, for example, the sequence in which they appear within the listing categories, except where prohibited by law. This applies to our mortgage, home equity and other home lending products. But this compensation does not influence the information we publish, or the reviews appear on this website. We do not cover the vast array of companies or financial deals that could be available to you. FG Trade/Getty Images

2 min read published 28 October 2022

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Written by Bankrate Written by This article was generated by using automated technology. It was then thoroughly edited and fact-checked by an editor from our editorial staff. Edited by Rhys Subitch Edited by Auto loans editor Rhys has been writing and editing for Bankrate since the beginning of 2021. They are passionate about helping readers gain the confidence to take control of their finances through providing precise, well-studied facts that break down complex subjects into bite-sized pieces. Reviewed by Mark Kantrowtiz Reviewed by Nationally acknowledged student financial aid expert Mark Kantrowitz is an expert on student financial aid, the FAFSA as well as scholarships, 529 plans, educational tax benefits, as well as student loans. The Bankrate promises

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You have money questions. Bankrate has answers. Our experts have been helping you master your finances for more than four decades. We continually strive to give our customers the right guidance and the tools necessary to be successful throughout their financial journey. Bankrate follows a strict standard of conduct, so you can rest assured that our information is trustworthy and accurate. Our award-winning editors and journalists provide honest and trustworthy information to assist you in making the right financial decisions. The content we create by our editorial staff is factual, objective, and not influenced through our sponsors. We’re open about how we are able to bring quality content, competitive rates and useful tools to you by explaining how we earn money. is an independent, advertising-supported publisher and comparison service. We are compensated in exchange for the promotion of sponsored goods and services or by you clicking on certain links posted on our website. This compensation could affect the way, location and in what order products are displayed within the categories of listing in the event that they are not permitted by law. This is the case for our mortgage home equity, mortgage and other products for home loans. Other elements, such as our own proprietary website rules and whether a product is offered in the area you reside in or is within your personal credit score may also influence the manner in which products are featured on this website. Although we try to offer the most diverse selection of products, Bankrate does not include specific information on each credit or financial product or service. Co-signing and co-owning a car are two approaches to applying for co-signing with an additional borrower. In both cases the second borrower has to have sufficient credit and earnings to be able to fund this loan on their own. Each has advantages and drawbacks, depending on what both parties are looking for. There are differences between co-signing and a co-owning vehicle. A co-signer is an individual who is accountable for the repayment of the loan but does not own any legal rights to the vehicle. A co-owner has equal claim towards it. Co-signing on a car loan In the case of a car co-signer, they agree to take on the monthly payments if the borrower can’t make them. It’s a huge decision that must be made and it will . Benefits of co-signing the car loan Assistance in qualifying: A co-signer can apply for the car loan they otherwise wouldn’t be qualified for. Build credit: When the principal borrower is able to keep up with payments, the credit of co-signers and co-signer can be positively affected. Reduce cost: If the co-signer has a very good to good credit score, the primary borrower can be eligible for a lower fee and interest rate. Risks of co-signing on an auto loan The responsibility for repayments: If the borrower defaults, the co-signer is for all loan repayments. 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 car In the instance of a car both the owner and the co-owner are listed as co-owners on the title. Having a co-owner 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 permission to sell the car. Benefits of co-owning a vehicle Co-owners are safer: The co-borrower has the safety of having their name on the title. Better terms: If both of the borrowers have credit that is strong the primary borrower could get better terms than if they applied alone. The risks of co-owning a vehicle equal right: A co-borrower enjoys equal rights to the car as the primary borrower. This means that the co-owner has to be involved in the transfer or sale of the vehicle. Insurance In the event that the co-owner doesn’t actually use the vehicle, they will likely be required to sign the insurance policy. This means higher cost for everyone concerned. How to choose between co-signing and co-owning the car. The primary difference between co-borrowers and co-signers is the amount of investment of the loan. Co-borrowers have more responsibility and control over the loan than cosigners. Co-borrowing is ideal for those with good credit and want to share equal rights to the vehicle- such as a couple that wants to buy a car together. However, it is not recommended co-borrowing is for those who doesn’t meet the requirements for the loan in the first place, or is in need of assistance to qualify for more money or a low interest. How to prepare for co-signing or co-owning an automobile To become co-signer for the loan you must be able to prove a steady income and be able to meet the requirements for credit scores that is set to be met by the lender. This is the same for being a co-owner because the credit of both borrowers is being considered. Even if you meet the requirements, an open dialogue should be conducted between the two parties. Co-signing and co-owning both carry substantial credit risk. Make sure there is an insurance plan for the event that the borrower who is primary will not be able to pay. The main point is that there are a variety of reasons why you might want to co-sign or purchase a car with another person. In any event it is essential to ensure that the two parties on the same page about what the relationship entails and what expectations are expected of each of you. Learn more


The article was written by produced using automation technology, and was thoroughly checked for accuracy and quality by an editor on our editorial team. 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 readers gain confidence to take control of their finances through providing clear, well-researched information that is broken down into complex subjects into bite-sized pieces.

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Review by Mark Kantrowtiz by Nationally known student expert in financial aid Mark Kantrowitz is an expert on financial aid for students including the FAFSA and 529 plans, scholarships educational tax benefits, and student loans.

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