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 mission is to help you make smarter financial decisions by offering interactive financial calculators and tools, publishing original and objective content, by enabling you to conduct research and compare data for free – so that you can make financial decisions with confidence. Bankrate has partnerships with issuers such as, but not restricted to, American Express, Bank of America, Capital One, Chase, Citi and Discover. How We Make Money The products that are featured on this website come from companies who pay us. This compensation could affect how and when products are featured on the site, such as, for example, the order in which they may appear in 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 that you see on this site. We do not include the universe of companies or financial offerings that could be accessible to you. SHARE: Tony Anderson/Getty Images
2 min read published on 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. The article was 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 to take control of their finances with concise, well-studied facts that break down complex subjects into digestible pieces. The Bankrate promise
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The relationship between the primary borrower and co-signer might change or the financial position of the co-signer could alter and as a result co-signer may want to get to get out of the contract. While it is possible to get out of a loan, simply changing one co-signer to an additional one on the initial loan is not likely. The process is more involved and may involve refinancing the loan or completing co-signer releases documents or paying off the loan in full to stop the co-signer’s role. It isn’t possible to just substitute your current auto loan co-signer Most lenders won’t just swap a current co-signer with a new one on an existing vehicle loan as it requires them to essentially complete the approval process to approve a . Although it’s always a good idea to ask the lender regarding this possibility, swapping one co-signer to another on an existing loan is not standard practice. The process typically applies to the conditions and terms of the loan and is not designed or designed to modify the parties that signed on to the loan. Refinancing may remove a co-signer on your vehicle loan and enable you to get a new one Yet another option to eliminate a cosigner of an auto loan is to simply . In other words, open an entirely new loan which settles the existing loan’s balance and then closes the account. The new loan can be opened with a new lender and can be done without co-signer involvement. In certain cases it is possible to open it by the same lender — though it’s not always feasible. In order to do this, however, you need to be able to qualify for an entirely new loan on your own that requires a great credit score and history of payment. If you’ve been in the process of purchased the vehicle, refinancing may also present the opportunity of obtaining the most competitive interest rate or to modify loan repayment conditions. Bankrate tip: If your credit rating is not up to par then you may want to consider locating an individual you feel confident in asking them to sign for a new loan. Removal of the co-signer from your auto loan is an option. Although not all lenders provide this option, it’s possible to get rid of a co-signer making a co-signer release. Contact the lender The first step is to connect directly with the lender who financed the loan and find out whether it offers a co-signer release option. Complete the required paperwork: If the lender provides a release option it is common to complete paperwork that eliminates the co-signer out of your loan and is the borrower who is responsible for repayment of the loan. Only the borrower who is the primary one is able 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’ll need to show that you can handle the loan by yourself and have a good credit score and sufficient funds to pay back the loan. If you make this alteration it is possible that your loan term may be changed. Eliminating a co-signer may also impact the interest rate of your loan especially in the event that the loan was initially approved based on the co-signer’s credit score. The main point is switching or eliminating a co-signer from an auto loan is not as simple or as straightforward as it may sound. In most cases, you’ll need to either pay off the loan completely or proceed with signing a release of co-signer — if the lender even allows this option. Think carefully before asking someone else to sign a loan for you initially and ensure you select someone you trust. Find out more
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 since late 2021. They are committed to helping readers feel confident 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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