What to know about switching co-signers on a car loan Part Of Financing a Car With a Co-Signer In this series Financing a Car With a Co-Signer Advertiser Disclosure Advertiser Disclosure We are an independent, advertising-supported comparison service. Our mission is to help you make better financial choices by providing you with interactive financial calculators and tools as well as publishing high-quality and impartial content. This allows you to conduct research and compare information at no cost – so that you can make sound financial decisions. Bankrate has agreements with issuers such as, but not limited to American Express, Bank of America, Capital One, Chase, Citi and Discover. How We Earn Money The deals that are advertised on this site are from companies that pay us. This compensation may impact how and where products appear on this website, for example, for example, the sequence in which they appear within the listing categories, except where prohibited by law for our mortgage, home equity and other home loan products. However, this compensation will have no impact on the information we provide, or the reviews you see on this site. We do not include the vast array of companies or financial offers that may be open to you. SHARE: Tony Anderson/Getty Images
2 min read published 12 September 2022
Written by Mia Taylor Written by Contributing Writer Mia Taylor is a contributor to Bankrate and an award-winning journalist who has two decades of experience and worked as a staff reporter or contributor for some of the nation’s leading newspapers and websites including The Atlanta Journal-Constitution, the San Diego Union-Tribune, TheStreet, MSN and Credit.com. Written by Rhys Subitch Edited by Auto loans editor Rhys has been writing and editing for Bankrate since the end of 2021. They are committed to helping readers gain the confidence to take control of their finances by providing precise, well-researched and well-written information that breaks down otherwise complicated topics into bite-sized pieces. The Bankrate guarantee
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So, this compensation can affect the way, location and in what order products are displayed within the categories of listing, except where prohibited by law for our credit, mortgage and other products for home loans. Other factors, such as our own proprietary website rules and whether a product is offered in the area you reside in or is within your own personal credit score may also influence how and where products appear on this site. Although we try to offer the most diverse selection of products, Bankrate does not include information about every credit or financial products or services. Making a deal with a co-signer may appear like an ideal idea at first however in some instances the plans might not work out as intended. There could be a conflict between primary co-signer and the borrower could go south or the financial situation of the co-signer may change and, in turn the co-signer might want to walk out of the deal. While it is possible to get out of an loan, simply replacing one co-signer with another one on the original loan is not likely. The process is more involved and can require refinancing the loan, completing co-signer release paperwork or simply paying the loan in full to stop the co-signer’s role. It’s not possible to just substitute your current auto loan co-signer Most lenders won’t just replace a co-signer by a different one on an existing car loan as it requires that they complete the approval procedure for an . Although it’s always a good idea to ask your lender about this possibility, swapping one co-signer to one on an existing loan is not standard practice. The process typically applies to the conditions and terms of a loan and is not intended or meant for modifying the parties that signed on to the loan. Refinancing may remove a co-signer on your vehicle loan and permit an entirely new loan. Another approach to eliminate a co-signer from an auto loan is to simply . Also, make a completely new loan which settles the existing loan’s balance and closes the loan. The new loan can be opened with an entirely new lender and may be opened without the involvement of the co-signer. In some instances it is possible to open it by the same lender — though this isn’t always feasible. In order to do this, however you’ll need to be able to qualify for the new loan by yourself that requires a great credit score and history of payment. If you’ve been in the process of buying the car refinancing could provide an opportunity to obtain an interest rate that is more competitive or revised loan payment conditions. Bankrate’s tip If your credit score isn’t up to scratch then you may want to consider locating an individual you are at ease asking them to co-sign for a new loan. Removing the co-signer from your auto loan is an option. While not all lenders offer this option, it is possible in certain cases to get rid of a co-signer making a co-signer release. Contact the lender: Your first step is to connect with the lender who has financed the loan and inquire if it offers a co-signer release option. Complete the required paperwork If you find that the lender offers a release option, you will typically need to fill out paperwork that strips the co-signer out of your loan and makes you the primary borrower accountable for the payment of the loan. Only the primary borrower is allowed to alter the terms of the loan. Lender approval: There’s no guarantee a lender will approve the release of co-signers. You must prove that you’re able to handle the loan by yourself and have a good credit score and financial resources to continue repayment. When making this type of change, your loan term may be changed. Removing a co-signer could impact the interest rate of your loan in particular when the loan was initially accepted based on co-signer’s good credit. The main point is switching or eliminating a co-signer from a car loan isn’t as easy or as simple as it sounds. Most of the time, you’ll have to either pay off the loan completely or follow the procedure of completing a co-signer release -depending on whether the lender even allows this option. Be cautious when asking someone to co-sign for a loan for you initially and make sure you choose one you can trust. Find out more
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Written by Contributing Writer Mia Taylor is a contributor to Bankrate and an award-winning journalist who has two decades of experience and worked as a staff reporter or contributor for some of the nation’s leading newspapers and websites including The Atlanta Journal-Constitution, the San Diego Union-Tribune, TheStreet, MSN and Credit.com. Edited by Rhys Subitch Edited by Auto loans editor Rhys has been writing and editing for Bankrate since the end of 2021. They are passionate about helping readers gain the confidence to control their finances with concise, well-studied and well-researched content that breaks down otherwise complicated topics into digestible pieces.
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