Today, buying a new vehicle on average costs a hefty penny in the U.S. In February 2023, Kelley Blue Book put the average price on a new set of wheels at $48,763. That’s almost 30% more than February 2020. Even used cars are expensive if you’re lucky to find exactly what you want. Cox Automotive reports that by January 2023 used vehicles, on average, cost $26,510.
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Your co-signer is responsible for your car payments too
With such exorbitant sticker prices since the pandemic, many Americans have had opted to buy a vehicle with the help of a co-signer. In other words, someone to act as a guarantor on the car loan. A co-signer assumes responsibility for car payments if the primary (main) borrower can’t make payments.
Adding a co-signer to your car financing can help reduce interest rate too, since they’re more likely to have a better credit score than you the primary buyer. This is especially true for younger car buyers, first-time drivers, someone with high debt-to-income ration, as well as those with no credit or stable employment history. Since the co-signer brings in additional income and better credit, lenders are more confident about getting their money back. Essentially, they now have two people responsible for the loan. If one defaults, the other takes over. The risk is lower for the lender.
To become a co-signer, a friend or family member must meet specific requirements like having a good or excellent credit score
Why remove a co-signer from your car loan and title
When a main borrower’s financial situation changes, they may choose to remove the co-signer from the loan and title of the car. Perhaps they’re no longer freelancing or acting as a contractor, and found full-time, well-paying employment. Maybe their credit score went up, their relationship status changed, or they had a fallout with the co-signer. If you’re better off financially, it’s easier to prove to your lender that you can take over the car loan by yourself. You’ll also have months or even years worth of on-time car payments made which serves as more proof that you’re a responsible borrower.
Your loan contract may have a co-signer release built in
To remove your co-signer from your car loan, you can ask your lender for a co-signer release. That option may have already be built-in to your contract with your lender. The paperwork on your car financing may state specific conditions under which you can get the co-signer release. For instance, one condition can be no late car payments. If you borrowed funds from a used car dealership, this co-signer release option is probably more difficult.
If you refinance your car loan can, you can lower your monthly car payment, reduce the interest you pay or shorten your loan term
You can refinance for a new loan contract (without co-signer)
You can refinance your car loan to remove your co-signer, especially if your credit situation is better than when you first applied for the loan. You can choose to refinance with the same, original lender or shop around for another bank/financial institution. Aside from removing the co-signer, refinancing can help you get a better interest rate to lower your monthly payments. Your loan will also be smaller at this point, since you’ve been making payments for a certain time period.
SEE ALSO: CAN YOU FINANCE ANOTHER CAR IF YOU’RE ALREADY A CO-SIGNER FOR SOMEONE
Basically, refinancing means you’re taking out a new car loan meaning that you can place JUST your name on the contract. No co-signer on this new loan contract.
You can sell the car and pay off loan with profits
If you sell your vehicle, you can pay off the entire loan with the profit. Once the car is sold, there’s no more financial obligation so no more co-signer. Just watch out for pre-term penalties, as most lenders make their money by getting payments every month for a long period of time. By paying early, you’re essentially taking away that regular revenue stream. Some lenders will ask you to pay a certain amount to make up for the losses.
You can transfer your vehicle title online, from any device, even your smartphone
How to remove co-signer from vehicle title
If the vehicle title has both your name (primary borrower) and your co-signer’s name, joined by an “and” then both must sign the title. If the names are separated by an “or”, only one of you must sign, so that you can get a new title only in your name without the co-signer. At the point you can request a title transfer, as you’re the new purchaser, and ownership is transferring solely to you. You can always apply for a title transfer online without having to go to a local DMV or tag agency.
Don’t forget to make sure that your car registration and license plate(s) are up to date as well as your auto insurance.
5 comments
How to remove my name from a car loan no longer with partner
Hi Patricia – if the loan is not paid off, you and the former partner can conact the company you financed with to refinance the loan into just your former partner’s name or inquire about other methods they may offer to remove you from the loan. As for the title of the vehicle itself on which that loan is listed, the company will usually take care of updating that too so that the title reflects the same owner as the loan.
Why do I have to have cosigner sign her name off title and registration when she is not cooperating to meet up with me to sign. If there is no “and” between the names why can’t I be able to remove her name off especially if I sold my car. I’m trying to transfer my name off and put my brothers name on it, who bought car from me. It’s like I have no rights. She co-signed only for loan company so that they could approve my loan to get my car couple of years ago. So how can that make her the owner of car also especially since I am the one that made all the payments . Legally, if there is not the word “and” between our names then I have the right to to take her name off without her signature, especially when my car has been paid off through lender.
Why doesn’t oregon DMV understand and that their are exceptions to the rule. There is supposed to be a form out there called “co-signer release form in situations like this. No body has heard of this form.. REALLY!.. I can not afford to take her to court..why can’t anyone understand that there are people out there that do not like to cooperate.
How can I get my name off my son’s car title since I’m the co signer without refinance. Is there a form to do that?
Hello, assuming you’re in Florida, you can sign over the title to your son and you son can apply for a title transfer plus register the vehicle. This will result in having his name only on the title. eTags can help with the transactions online.