Can You Remove a Cosigner from a Car Loan?

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Many drivers in Macon and Dublin obtain auto loans with cosigners. A cosigner is an individual with good credit and sufficient income, usually a parent or other family member. This person agrees to assume the loan payments if the primary borrower is unable to make them for any reason. If you have someone cosign your car loan, there may come a time when you no longer need this person's assistance. So, can you remove a cosigner from a car loan? What does this process involve? Learn about cosigner removal with the finance team at Five Star Lincoln Warner Robins. If you have any questions after reviewing this information, please don't hesitate to contact our dealership. 

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What's The Purpose Of A Cosigner On A Loan?

Adding a cosigner is one of the best ways to expedite your auto loan application if your credit is currently not where you want it to be. Here's why:  

  • If your credit is low due to missed payments or a high debt-to-income ratio, adding a second name to the dotted line proves that someone else trusts you to pay back the loan. 
  • This creates a protective buffer for the lender because the partner is supposed to step in and make payments if you fall behind.
  • However, the process also creates a new financial risk for your partner. If you fail to pay back your loan or end up missing payments, it will leave a negative mark on your record.

 

Even if you're always on time, you or your partner might still wonder how to remove a cosigner from a car loan. The amount of debt in their name could prevent them from taking out another loan or moving forward on a project they are interested in.

How To Remove A Cosigner From An Auto Loan

Removing a cosigner from an auto loan is almost always possible. If you've tried contacting your lender by phone, and you're still not sure of how to remove a cosigner from an auto loan, you'll want to discuss the following options with your lender:

  • Refinancing Your Loan: Refinancing means renegotiating new loan terms with the same lender or another lending partner. If you're able to refinance by yourself, your cosigner's name will be removed, and you might even secure a better interest rate. Try this option if your credit has gone up since you initially took out the loan.
  • Cosigner Release: Go over the fine print of your contract and see if there's a cosigner release option for you to explore. If you've made enough on-time payments, some contracts will let you remove the cosigner's name and eliminate their risk right away. 
  • Sell the Car and Pay Off Your Loan: If all else fails, you might decide to sell the car and pay off the loan in full. Although this is only a good option if you're not currently underwater on your car loan, doing so will immediately remove your cosigner's (and your own) obligation.

Get More Car Buying Tips From Five Star Lincoln Warner Robins

Do you have any questions about cosigning for car loans or removing cosigners from car loans? Call (478) 922-9131 today or message us online. Our dealership in Warner Robins is here to make purchasing the new or pre-owned vehicle you want stress-free and seamless. We also invite you to apply for financing and use our credit estimator.