A joint auto loan is when a primary borrower shares a car loan with either a cosigner or a co-borrower. You may have needed a cosigner or co-borrower to get approved, but things change, and you may no longer need or want their name on the loan. If you want to remove someone’s name from a joint auto loan, you need to refinance the loan on your own.
Removing a Cosigner from a Car Loan
A cosigner is someone who lets you "borrow" their good credit in order for you to get approved for financing. Even though their name is on the loan, cosigners don’t share ownership rights to the vehicle, but are responsible for paying for it if you miss payments or default. Whatever the reason for having a cosigner in the first place, you have to refinance your car loan if you want to remove them.
Cosigners can’t take themselves off the loan. In order to remove a cosigner from an auto loan, you need to make sure some time has passed and that your credit score has improved so you can qualify to refinance the loan.
It takes time to build credit, and most lenders like to see that around two or three years have gone by since taking out the original car loan. To refinance, you need to qualify for the auto loan by yourself and meet the lender’s refinancing requirements pertaining to your credit score, income, loan, and vehicle.
You don’t need the cosigner with you to refinance, but you should let them know that you plan on removing them from the loan so they aren’t confused when they see a closed car loan listed on their credit reports.
Removing a Co-Borrower from a Car Loan
A co-borrower is generally a spouse, and co-owns the vehicle with the primary borrower. Unlike a cosigner, a co-borrower's name is listed on the title, and they share equal rights to the car. Also, you can combine incomes with a co-borrower, which means removing them isn’t as easy as simply refinancing.
In the event you and your co-borrower no longer want to share the vehicle and you plan on being the sole owner, you need to refinance to remove the co-borrower from the loan. Make sure you’re able to qualify for the auto loan by yourself and can meet the lender’s income requirements on your own.
Once the car is solely in your name, you and the co-borrower also need to head to your local DMV or Secretary of State to sign the title. After that’s said and done, you can apply for a brand new title and registration with just your name on it.
The Bottom Line
If you don’t qualify for auto financing on your own right now, but you want to remove a cosigner or co-borrower from your joint car loan, your best bet is to wait.
On the other hand, if you’re looking to get a bad credit auto loan, we can help you locate a dealership to work with regardless of whether or not you have a cosigner or co-borrower.
At Auto Credit Express, we’ve been helping consumers find financing for over 20 years by connecting them to local dealers that know how to handle bad credit. To get started, fill out our car loan request form today!