A cosigner on an auto loan isn’t listed on the car title, and they have no ownership rights. A co-borrower, however, is listed on the title and has equal ownership rights. How you go about removing a second person from a car loan depends on whether they’re a cosigner or co-borrower.
Cosigner vs. Co-borrower
A cosigner is someone who signs on the loan in order to help the primary borrower get approved for financing. Cosigners let the primary borrowers “borrow” their good credit to increase their chances of a loan approval, and the auto loan is listed on both the cosigner and primary borrower’s credit reports. Although a cosigner’s income is verified, their incomes aren’t co-mingled, meaning both have to individually qualify for the loan with their own income. But, in the event the primary borrower defaults or isn’t able to pay, the cosigner becomes responsible for making payments.
A co-borrower, on the other hand, does have legal rights to the vehicle. Typically, a co-borrower is a spouse and is listed on the car title along with the primary borrower, and they can co-mingle funds to qualify for the loan. Unlike a cosigner, a co-borrower is equally protected in the event the primary borrower declares bankruptcy.
How to Get Someone Removed from a Car Loan
When it comes to removing someone from an auto loan, it depends on whether they’re listed as a cosigner or co-borrower.
- To remove a cosigner – If you originally took out a bad credit car loan, some time passed, your credit improved, and you no longer need a cosigner, the easiest way to remove them is to refinance the vehicle. When you refinance, you could qualify for a more affordable monthly payment, possibly get a better interest rate, and either remove or add a cosigner. The cosigner doesn’t have to do anything to get removed, but they can’t remove themselves from the loan – the primary borrower has to do that.
- To remove a co-borrower – Because a co-borrower has equal rights to the car, removing one is slightly different if you qualify for refinancing. In order to remove a co-borrower, you and the co-borrower visit your DMV or Secretary of State, where you both sign the title, then you apply for a new title and registration.
The Bottom Line
Make sure you sit down and discuss what it means to be a cosigner or co-borrower with the person willing to do this. They should not only know their responsibilities, but also what could happen if something unexpected occurs.
If you don’t have a cosigner or co-borrower to give you that extra boost toward an auto loan approval and worry about being turned down, let Auto Credit Express help. We've been helping car buyers with credit issues for nearly two decades by matching them with a dealership in their area that works with a wide range of credit situations. Our service is free and comes with no obligations, so you have nothing to lose. Go ahead and fill out our simple and secure auto loan request form to get started today.