If you’re thinking about cosigning for someone, you may be wondering “does a cosigner have rights to the car?” The simple answer is no, they have no legal rights to the car loan. But, they can work with the primary borrower to ensure all payments are made and the loan term runs smoothly.
Auto Loan Cosigner Rights
The first thing you need to understand is the difference between a cosigner and a co-borrower. A co-borrower is someone who shares equal ownership rights and is usually a spouse. On the other hand, a cosigner is someone who signs on the car loan in order to help the primary borrower get approved.
A co-borrower has ownership rights to the car, but a cosigner doesn’t. The reason is because a cosigner’s income isn’t added to that of the primary borrower for the income requirements of the loan. While a cosigner must meet the income requirements, their name isn’t listed on the title, giving them no legal right to take the car.
What if a Car Loan Defaults?
Unfortunately, if the primary borrower defaults on the car loan, you won’t be able to take possession of the vehicle as a cosigner, even though you'll be responsible for any payments. Once you sign the loan contract, your credit will be affected, too. If the primary borrower defaults, the lender will come to you in order to make sure payments are made. The best way to avoid this is to talk to the primary borrower before they miss any payments. Discuss with them how you, as the cosigner, can help out temporarily without affecting the credit scores of either one of you.
So, even though a cosigner is responsible for making payments when the primary borrower doesn't and their credit is impacted by the loan, they have no ownership rights over the vehicle.
Finding Auto Financing After Repossession
It’s important you understand what your rights are as a cosigner, and what being a cosigner entails. Talk with the primary borrower and ask questions before signing. You’re putting your credit – and your finances, in some cases – on the line for them, so make sure you understand what stepping in to help means.
On the other hand, if you need a car loan and have less than perfect credit, Auto Credit Express wants to help you find financing. We work with a nationwide network of special finance dealers that have the lending resources to work with people in many difficult situations. Fill out our free, no-obligation auto loan request form online to start the process of getting matched with a local dealership today.