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How to remove a co-signer from a car loan

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If your circumstances have changed and you would like to remove a co-signer from your auto loan, there are three primary options. You can refinance, get a co-signer release or pay off the loan.

Options for removing a co-signer from a car loan

Having a co-signer on an auto loan is a great way to get approved by lenders if your credit score is less than ideal, and gives your lender added assurance that you will pay off the loan. But those with added financial responsibility alongside the main borrower may want to exit due to a variety of reasons.

Refinance

One way to remove a co-signer from your loan is to refinance. To do this you will take out an entirely new loan. This way you start from scratch and won’t be attached to the co-signer anymore.

Keep in mind that in order to gain approval for a refinance you will need to have been making your monthly payments in a timely manner and have good credit.

Get a co-signer release

To get a co-signer release you will first need to contact your lender. After contacting them you can request the release — if the lender offers it. This is just paperwork that removes the co-signer from the loan and places you, the primary borrower, as the sole borrower on the loan.

A caveat to this option is that your initial loan term and interest rate may be impacted. Let’s say your approval was dependent on your co-signer’s good credit. If they are released from the loan your lender may rethink lending to you or adjust your current terms. You will have had to show timely payments before they agree. Along with this, not all loans have a co-signer release option present, so it’s wise to look into this prior to agreeing to a loan.

Pay off the loan

The most painless way to remove a co-signer is to simply pay off the car loan. If the removal is due to financial strain this may not be the most practical option, but paying off the loan in full will rid the responsibility of both the primary borrower and the co-signer.

To do this, you’ll be expected to pay off the current loan balance along with the payoff amount. You’ll have to connect with your lender for the specific methods of paying off your loan, especially if the pay-off timeline is earlier than initially agreed upon.

Next steps

The removal of a co-signer can be a time-consuming process, so it’s recommended to think before agreeing to a co-signed loan. And you should only go ahead with a removal in very specific circumstances.

But, if necessary, go ahead with refinancing, a co-signer release or just paying off the auto loan.

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Written by
Rebecca Betterton
Auto Loans Reporter
Rebecca Betterton is the auto loans reporter for Bankrate. She specializes in assisting readers in navigating the ins and outs of securely borrowing money to purchase a car.
Edited by
Rhys Subitch