Things happen and relationships change over time. Maybe things turned sour with your significant other, you broke up, and you’re figuring out how to divide up those things you once owned together. If you’ve cosigned on an auto loan for a boyfriend or girlfriend and aren’t sure what to do about it, the good news is that there are options to choose from.
Four Options to Consider
As long as you and your ex cooperate during the process, there are four options to consider in removing a cosigner from an auto loan:
- Refinance – Either the primary borrower or the cosigner can refinance the car. When you refinance, you essentially start over and take out a new loan. Doing this removes the second person, and could even result in a better deal on the loan.
- Sell the car – Another option is to sell the car privately and divvy up the profit. This is easier if the loan is paid off or there’s equity in the vehicle. If there’s negative equity, one or both parties will need to come up with the cash to make up the difference.
- Trade it in – If you’re the primary borrower, you can take action into your own hands and trade it in. But if you’re not, you can trade in the car you share with permission from your ex. Your ex will need to sign the title, odometer disclosure form, and any other sales-related documents.
- Keep the car – If selling or refinancing isn’t in the cards right now, the last option is to keep the car and continue making payments. Keep in mind that if you and your ex’s names are on the contract, you both are still responsible for the loan and your credit scores will take hits if on-time payments aren’t made.
If these four options don’t work, there are some last resort choices, but they won’t do you or your credit any good. If your ex won’t cooperate on making car payments, you can let the lender repossess the vehicle – which will affect your credit score greatly – or file bankruptcy, which is even worse. These aren’t the best ways to approach a cosigned auto loan, so make sure you discuss what to do with your ex before things get out of hand.
Maintaining relationships is hard, it gets even more complicated when things don’t work out and you have assets to divide. If you cosigned on a car for a boyfriend or girlfriend and broke up, removing yourself from the loan could turn out to be complicated, unless you’ve thought things through.
If you’ve recently found yourself without a vehicle and are looking to start over with a car loan, Auto Credit Express wants to help. We work with local dealerships that are teamed up with lenders that know how to handle many unique situations. Start the process today by submitting our free and secure auto loan request form online.