If you asked a cosigner for help in qualifying for an auto loan, they don’t have any ownership rights to the vehicle, which means they can’t legally sell it.
Cosigners and Your Ownership Rights
While a cosigner helps you qualify for a car loan by “lending” you their good credit score, they don’t get their name on the title, which means they have no ownership rights to the vehicle. The cosigner may have an obligation to the loan, and the lender can ask them to pay for it, but they can’t take possession of your car and sell it.
To legitimately sell a vehicle, the registered owner must sign over the title to the buyer. If your cosigner somehow gets your car and tries to sell it to someone else, the buyer can’t register the vehicle in their own name.
This is a form of title jumping, which is when you sell a car to someone else without registering it in your name first. If the cosigner takes your vehicle, doesn’t get their name on the title and tries to sell it to someone else, it’s a felony in all 50 states.
If your cosigner is trying to sell your car, calmly inform them that they have no ownership rights to the vehicle and they can’t sell it. If tensions are becoming high between you and your cosigner, it may be time to remove them from the auto loan.
Removing a Cosigner From an Auto Loan
There are two ways to remove a cosigner from a car loan: sell the vehicle or refinance the loan.
If you can sell the car or trade it in for more or equal to your loan balance, you can pay off your loan. Once you pay off the loan, both you and the cosigner are off the hook for the balance. You don’t need the cosigner’s permission to sell the vehicle, either, but it’s probably a good idea to let them know that you’re selling the car since they’ve been tied to the loan.
If you want to keep the vehicle, then consider refinancing. Refinancing involves replacing your auto loan with another one, and you can remove a cosigner this way if you can qualify. When originally took on the car loan and had a cosigner, it’s probably because your credit wasn’t in the best shape. But to refinance, many lenders that offer it don’t require your credit score to be perfect – just that it’s improved. If you’ve been making all of your payments on time and managing your credit, it’s likely that your credit rating has seen some improvement and you may qualify for refinancing.
In addition to removing the cosigner from the loan, you may also be able to get a lower interest rate. Or, you could try to qualify for a longer loan term to lower your monthly payment. Lowering your interest rate and extending your loan term can lower your auto loan payment, but just extending your loan term means paying more in interest charges, so be aware of the extra cost if you go that route.
If you’d like to get moving on the refinancing process, click here for more information and refinancing resources.
Bad Credit Car Loans
Many borrowers who bring cosigners along for the ride do it because they struggle to meet credit score requirements. But not everyone has someone that can help out, or they simply want to take on a car loan alone. For bad credit borrowers in need of an auto loan without a cosigner, subprime financing could be the answer.
Subprime lenders look at more than just your credit score, whereas traditional car lenders put a lot of weight on your credit rating. These lenders are signed up with special finance dealerships, and they often work with borrowers in tough credit situations such as bankruptcy, no credit, and those with tarnished credit histories.
Here at Auto Credit Express, we match borrowers to dealers in their local area that are equipped to assist borrowers that need vehicle financing. Start the search for a dealership by filling out our free auto loan request form, and we’ll look for one in your area with no obligation.