Co-signing vs. co-owning a car: Which is better? Advertiser Disclosure Advertiser Disclosure We are an independent, advertising-supported comparison service. Our aim is to assist you make better financial choices by offering interactive financial calculators and tools as well as publishing objective and original content. We also allow you to conduct research and compare data for free to 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 Make money The products that are advertised on this site are from companies that pay us. This compensation could affect how and when products are featured on this site, including such things as the sequence in which they appear within the listing categories and other categories, unless prohibited by law. Our mortgage, home equity and other products for home loans. This compensation, however, does not influence the information we provide, or the reviews that you see on this site. We do not cover the entire universe of businesses or financial offers that may be open to you. FG Trade/Getty Images

2 min read Published 28 October 2022

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Written by Bankrate The article was created by using automated technology. It was then thoroughly checked and edited by an editor from our editorial team. 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 committed to helping readers gain the confidence to control their finances through providing clear, well-researched information that breaks down otherwise complicated topics into digestible pieces. Reviewed by Mark Kantrowtiz Reviewed by Nationally well-known expert in student financial aid Mark Kantrowitz is an expert on student financial aid, the FAFSA, 529 plans, scholarships, education tax benefits along with student loans. The Bankrate guarantee

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So, this compensation can impact how, where and when products are listed and categories, unless it is prohibited by law. This is the case for our mortgage or home equity products, as well as other home loan products. Other elements, such as our own website rules and whether a product is available within your region or within your self-selected credit score range could also affect the manner in which products are featured on this website. While we strive to provide an array of offers, Bankrate does not include specific information on every credit or financial product or service. Co-signing and co-owning a car are two different methods of requesting the loan with an additional borrower. In both instances the second borrower must to have enough credit and income to be able to fund the loan by themselves. However, each comes with advantages and drawbacks, dependent on what the parties want. The distinctions between a co-signing and a co-owning a car A co-signer is a person who is equally accountable for the repayment of the loan but does not have any legal ownership of the car. Co-owners share the same rights to the vehicle. Co-signing the purchase of a car loan In the case of an automobile co-signer, they agree to make monthly installments in the event that the borrower is unable to make the payments. It’s a huge choice to make and could be . Benefits of co-signing on the car loan Help to qualify: A co-signer is eligible for a car loan they otherwise wouldn’t be qualified for. Build credit: When the principal borrower is able to stay on top of payments, the credit score of co-signers as well as the co-signer may be improved. Reduce costs: If the co-signer has a good or good credit score and the primary borrower is in good standing, they can be eligible for a lower fee and interest rate. The risks of co-signing the car loan the responsibility for payment: If the borrower defaults, the co-signer is accountable for the entire loan repayments. Legally insolvent The co-signer isn’t in the title of the car and does not have any legal right to the car. Co-owning a car is a legal option. In the case of a car, both the owner as well as the co-owner are as co-owners on the title. Having a co-owner doesn’t change the fact that the primary borrower has the title to the property. Based on the way in which the vehicle is named, the primary borrower may require approval before they are able to sell the car. Benefits of co-owning a vehicle Security for the co-owners: The co-borrower has the protection that their names are on the title. More favorable terms: When both of the borrowers have good credit, the primary borrower may receive better terms than if they applied on their own. Risks of co-owning a car equal rights: The co-borrower enjoys the same rights to the vehicle as the principal borrower. This means that the co-owner has to participate in either the sale or transfer of the vehicle. Insurance: Even if the co-owner does not utilize the vehicle, they will likely need to be on an insurance plan. This can mean higher costs for everyone concerned. What is the best way to decide between co-signing and co-owning a car The main difference between co-borrowers and co-signers is the amount of money invested on the loan. Co-borrowers take on more responsibility and responsibility than co-signers. Co-borrowing is best for people who both have excellent credit scores and wish to have equal rights to the car — such as an engaged couple who wish to buy a car together. On the other hand, a for a borrower who doesn’t meet the requirements for the loan in the first place, or is in need of assistance to qualify for a larger amount or lower interest rates. How to prepare for co-signing or co-own a vehicle To be a co-signer for the loan it is necessary to be able to prove a steady income and be able to meet the criteria for credit score that is set to be met by the lender. This is the same for co-ownership, as the credit of both borrowers is being taken into consideration. If you do meet the criteria, an open dialogue should be conducted between the two parties. Co-signing or co-owning each comes with significant credit risk. Make sure there is an insurance plan for the event that the primary borrower can’t pay. The bottom line There are many reasons why you may choose to co-sign or purchase an automobile with a different person. In either case it is essential that both parties are on the same page about what their relationship is about and what expectations are expected of each of you. Learn more


The article was written by created using automated technology and thoroughly edited and fact-checked by an editor on our editorial staff. 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 gain confidence to control their finances by providing precise, well-studied facts that break down otherwise complicated topics into digestible pieces.

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Reviewed by Mark Kantrowtiz Reviewed by Nationally acknowledged Student Financial Aid expert Mark Kantrowitz is an expert on student financial aid and the FAFSA as well as 529 plans, scholarships as well as tax benefits for education along with student loans.

Nationally recognized student financial aid expert

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