When you need to refinance your vehicle, whether or not you need a cosigner depends on your credit situation and the state of your loan. Usually, one isn't needed if you're taking good care of your loan by paying on time and improving your credit. But, if you're trying to refinance your vehicle and your credit isn't the best you could benefit from adding a cosigner.

A cosigner acts as a backup for the lender in case you can't pay, and also "lends" you their good credit score to help get approval. Here are a few tips on refinancing with or without a cosigner.

What is Refinancing?

Refinancing CarRefinancing is replacing your current car loan contract with a new one that has different rates and/or terms. When you refinance, you do so to save money on your auto loan by either qualifying for a lower interest rate or for a longer loan term. If you opt to refinance to a longer term, your monthly car payment will go down, but if you don't lower your interest rate, too, you end up paying more interest in the long run.

Adding a Cosigner When Refinancing

To add a cosigner when you refinance is just like adding a cosigner at the beginning of your loan. They need to meet the lender qualifications and typically need to have good or excellent credit.

Generally, the requirements to refinance a vehicle are all pretty standard among refinancing lenders, though the specifics vary. Typically, the requirements are:

  • You must have had the loan for at least one year
  • You must have a good or improved credit score
  • Your car must meet lender requirements
  • The loan amount must be within the refinancing range
  • There mustn't be negative equity in the vehicle.

If you're refinancing and want to add a cosigner, they still have to qualify for the loan and must be on board with the process. Additionally, the cosigner doesn't always have to come with you, in some cases, the lender can send the cosigner documents to sign and they can have them notarized and sent back.

Removing a Cosigner When Refinancing

To remove a cosigner your credit must have improved since taking out the loan so that you qualify to finance the vehicle on your own. When you refinance, the old loan is closed, and your cosigner is released from obligation.

In order to qualify on your own when you refinance, you need to meet all the requirements outlined above, plus have a good enough credit score to stand on your own during loan approval.

Need Help to Find Refinancing?

If you're looking for the right lender to refinance your vehicle with, we want to help. Here at Auto Credit Express, we work with dealers across the nation that specialize in working with credit-challenged consumers. Our team of experts can also connect you to the right resources for refinancing your loan.

To connect with a refinancing specialist, simply fill out our refinance request form. However, if refinancing doesn't seem to be in the cards, but you need a car loan to help get you back on the road, our special financing request form can connect you to a dealership in your area that is equipped to handle unique situations.