Co-signing or. co-owning a vehicle: Which is better? Advertiser Disclosure Advertiser Disclosure We are an independent, advertising-supported comparison service. Our aim is to assist you make smarter financial decisions by offering interactive tools and financial calculators that provide objective and unique content. This allows you to conduct your own research and compare information at no cost to help you make sound financial decisions. Bankrate has agreements with issuers including, but not limited to American Express, Bank of America, Capital One, Chase, Citi and Discover. How We Earn Money The offers that appear on this site come from companies that pay us. This compensation could affect how and where products are displayed on the site, such as, for example, the order in which they may appear in the listing categories, except where prohibited by law. This applies to our loan products, such as mortgages and home equity, and other home lending products. But this compensation does have no impact on the information we provide, or the reviews you see on this site. We do not contain the universe of companies or financial offers that may be accessible to you. FG Trade/Getty Images
2 min read published 28 October 2022
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Written by Bankrate Bankrate. This article was written by using automated technology. It was then thoroughly checked and edited by an editor on our editorial staff. Written by Rhys Subitch Edited by Auto loans editor Rhys has been editing and writing for Bankrate since the end of 2021. They are dedicated to helping their readers gain the confidence to control their finances through providing precise, well-studied information that breaks down complex topics into manageable bites. Reviewed by Mark Kantrowtiz Reviewed by Nationally well-known expert on student financial aid Mark Kantrowitz is an expert on student financial aid including the FAFSA as well as 529 plans, scholarships education tax benefits , and student loans. The Bankrate guarantee
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There are differences between co-signing and a co-owning a car A co-signer is a person who is equally responsible for repaying the loan, but doesn’t have any legal ownership of the vehicle. A co-owner is entitled to the same rights to it. Co-signing for an automobile loan In the case of a car co-signer, the co-signer is required to pay the monthly installments in the event that the borrower isn’t able to pay these payments. This is a big decision to make and will . Benefits of co-signing on the car loan Help to qualify: A co-signer is eligible for an auto loan they otherwise wouldn’t be qualified for. Improve credit score: When the principal borrower is able to remain on top of their payment, the credit of both the primary borrower and co-signer may be improved. Reduce costs: If the cosigner is a good to excellent credit score then the primary borrower will qualify for a lower interest rate and fees. The risks of co-signing an auto loan Responsibility for payments If the borrower fails to pay, the co-signer is in charge of the totality of loan repayments. There is no legal claim co-signer does not appear in the title of the car and does not have any legal right to the car. Co-ownership of a car in the instance of a car both the owner and co-owner are listed as co-owners on the title. Co-ownership doesn’t alter any fact about the reality that the borrower who is the main one has the title to the property. Depending on how the car is titled and the primary borrower might require permission to sell the vehicle. Benefits of co-owning a car Safety for co-owner A co-borrower is protected by the security of having their name listed on the title. More favorable terms: When both borrowers have good credit, the primary borrower may receive better conditions than if they were applying on their own. The risks of co-owning a vehicle equal rights: The co-borrower enjoys the same rights to the vehicle as the primary borrower. This means the co-owner must take part in sale or transfer of the vehicle. Insurance: Even if the co-owner doesn’t actually use the car, they will likely be required to sign the insurance policy. This can mean higher costs for everyone involved. How to choose between co-signing and owning the car. The primary difference between co-signers and coborrowers is the level of investment on the loan. Co-borrowers have more responsibility and responsibility than co-signers. Co-borrowing is ideal for those who have good credit and want equal rights to the vehicle — such as an engaged couple who wish to purchase a vehicle together. However, it is not recommended a for a borrower who wouldn’t qualify for the loan at all, or requires assistance in obtaining an amount that is larger or with a lower interest rates. How to prepare to co-sign or purchase a car To be co-signer for an loan it is necessary to be able to prove a steady income and meet the criteria for credit score that is set for you by your lender. Similar requirements apply to being a co-owner because the credit of both borrowers is being considered. Even if you satisfy the requirements, an open dialogue should be conducted between both parties. Co-signing and co-owning both carry significant credit risk. Be sure to have a plan in place to cover the case that the principal borrower is unable to pay. The bottom line There are many reasons why you could choose to co-sign a car with another person. In any case it is crucial that both parties are on the same page regarding the nature of their relationship and what expectations are expected of each of you. Find out more
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Written by The article was created using automated technology and was thoroughly checked for accuracy and quality by an editor from our editorial team. Editor: Rhys Subitch Edited by Auto loans editor Rhys has been editing and writing for Bankrate from late 2021. They are dedicated to helping readers gain confidence to manage their finances with concise, well-studied information that breaks down complex subjects into bite-sized pieces.
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Reviewed by Mark K. Kantrowitz Reviewed by Nationally recognized student financial aid expert Mark Kantrowitz is an expert on financial aid for students including the FAFSA, scholarships, 529 plans as well as tax benefits for education as well as student loans.
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