Can You Remove a Cosigner from a Car Loan?

Couple sitting at sales desk at dealership

 


When you got approved for an auto loan, you may have been in a situation where you had a rough credit history–or you have little to no history. Cosigning for an auto loan is a great way to get a vehicle for your Nashville commutes, but now you’re wondering how to remove a cosigner from an auto loan. 

So, can you remove a cosigner from a car loan? While it does take some work to complete, removing a cosigner from your auto loan can be done. Some restrictions apply depending on the terms of your lender, but most lenders will work with customers to adjust their contracts. Read on with the team at Music City Autoplex to learn how to remove a cosigner from a car loan, and contact us if you have any questions along the way. 

Why You’d Need a Cosigner

Shoppers with poor credit history–or little to no credit history–aren’t out of luck when trying to find a car for the Hendersonville drives. Adding a cosigner is a way to make shoppers look like a better investment to lenders, with the option of removing a cosigner from the auto loan in the future. However, there are other benefits to adding a cosigner: 

  • Shoppers who have a low credit score due to missed payments or a high debt-to-income ratio can find that adding a second name to the loan shows that you’re trusted to pay back the balance. 
  • The added buffer of a second name on the loan gives the lender peace of mind as the other partner is expected to take over payments if they fall behind. 
  • However, you should keep in mind that a car loan cosigner is putting themselves at financial risk. Failing to pay back the loan or missing any payments also adds a negative mark to their credit report. 

While timely payments are being made, you and your cosigner may still be considering how to remove a cosigner from a car loan as this debt can lead to the cosigner not being able to take out another loan. 

How to Remove a Cosigner From a Car Loan

Now that you know removing a cosigner from an auto loan is possible, what are your options for how to remove a cosigner from an auto loan?

  • Refinance Your Loan – If your credit score has increased, refinancing might be a good option for your Clarksville-area loan. By refinancing, the lender or a new lender will create new loan terms that may be easier to handle by yourself; giving the cosigner the chance to remove their name. Refinancing may even give you a better interest rate. 
  • Cosigner Release – Comb through the fine print of your contract. There may already be an option for a cosigner release as the result of an adequate number of on-time payments. This means you can separate your cosigner from the contract right away. 
  • Sell the Car and Pay Off Your Loan – Another option for how to remove a cosigner from an auto loan is by selling the vehicle and paying the loan in full. Selling removes you and your cosigner’s obligation to the car loan, however, this option only works if you’re not upside down on the loan.

Explore Car Buying Tips with Music City Autoplex!

As you can see, you can remove a cosigner from a car loan, and the team at Music City Autoplex is here to help you every step of the way. The knowledgeable team in our finance center can walk you through your options, or explore other financing options with you. Be sure to discover our other financing tips like how to improve your credit score, or what is a good interest rate for car loans.

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