If you had someone cosign on your car loan, but now they want out, you may be able to refinance and remove them from the loan. Or, you could sell the vehicle, since that removes a cosigner as well.

Removing a Cosigner From an Auto Loan

A cosigner could want out of an auto loan for a number of reasons. If they originally agreed to cover your car payments in the event you couldn’t, but they've now lost income or don’t have the ability to pay, they may want to relinquish responsibility to avoid troubles down the road.

No matter the reason, the easiest way to remove a cosigner is to refinance the auto loan. That is, if you want to keep your current vehicle.

Refinancing is replacing your current car loan with a new one. If you can qualify for the loan by yourself, you can remove the cosigner when you refinance. Most borrowers refinance to lower their monthly payment, but you can also remove a cosigner or co-borrower.

How Do I Refinance a Car Loan?

Borrowers who have cosigners usually need them because their credit score is too low to qualify for an auto loan alone. However, after some time and made car payments, bad credit borrowers can improve their credit score.

Your credit score doesn’t have to be great to refinance, but it must have seen improvement. If your credit score is better than it was when you first got into the vehicle, then you’re one step closer to qualifying for a refinance.

While lenders vary in their specific requirements for refinancing, you can count on your lender to require these basic guidelines:

  • You’ve had the loan for at least one year
  • You’re current on payments
  • You have equity or the car’s value is equal to your loan amount
  • Your vehicle has fewer than 100,000 miles and isn’t over 10 years old
  • Your loan amount has to meet the lender’s requirements (can’t be too big or too small)

The lender that you choose to apply with may also have other stipulations for refinancing.

To refinance your auto loan, you need to find a lender. You may be able to work with the lender that you originally financed the car through, or you can find another one. Most borrowers who refinance look for another lender so they can rate shop to look for the best deal they can qualify for.

If you’re ready to take the next step and remove your cosigner from the auto loan, click here. Our trusted partner allows you to view and compare refinancing offers online, and they can look for one that’s right for you.

Sell and Remove the Cosigner

If you don’t think that refinancing is the right move for you, then it may be time to sell the vehicle. Selling the car is also a way to allow the cosigner out of the auto loan – if you don’t have the loan, the cosigner isn’t tied to anything.

You also don’t need to have the cosigner present when you sell the vehicle, since their name was never listed on the title. Although, you should at least let them know that you’re selling the car that they cosigned for!

Even though a cosigner helped you get into an auto loan, your credit may still not be the best. If you don’t have a cosigner and you have poor credit, but you need another vehicle, look into subprime car loans.

Subprime lenders work through a dealership’s special finance department, and they look at more than just your credit score. Generally, this includes taking a look at your income, living stability, credit reports, and requiring a down payment.

Finding these lenders is the tricky part, but we want to help with that! Here at Auto Credit Express, we’ve created a nationwide network of dealers that are signed up subprime lenders. Get started right now by completing our free auto loan request form, and we’ll get to work for you right away.