Can You Remove a Cosigner from a Car Loan?

When you first took out an auto loan for your vehicle, perhaps you had to have a cosigner in order to get approved. It’s a common practice among first-time car-buyers from Corona and individuals who need a little credit help. Someday, though, you may wonder, can you remove a cosigner from a car loan? Typically, yes, removing a cosigner from an auto loan can be done. Learn how to remove a cosigner from a car loan, below!

Why Get a Cosigner in the First Place?

If you’re applying for an auto loan with bad credit, getting a cosigner is a common way to help yourself get approved. Here’s how it can help:

• If you have low credit or a high debt-to-income ratio, the existence of a cosigner indicates that the person trusts your financial responsibility enough to back you up and put their own credit on the line.
• A cosigner not only shows lenders that others have trust in your financial responsibility but more importantly, it also provides them with the reassurance that if you were to miss your payments, the cosigner could act as a backup to get the payment from.
• Your cosigner’s good credit standing can help you get approved for an auto loan, but it’s also at risk because if you were to miss your payments, it will affect not only your credit but the cosigner’s credit, too.

Once you’ve been making on-time payments for a while and feel like you’re in good standing to be the sole borrower listed on your auto loan, you and your cosigner may wonder how to remove a cosigner from an auto loan. By removing the cosigner from your auto loan, they’ll be freed up to pursue a separate loan of their own they may need but have been putting off.

How to Remove a Cosigner From a Car Loan

More than likely, you won’t experience any issues when removing a cosigner from an auto loan. The first step is to visit your lender in Riverside or contact them by phone to find out what you need to do. The options you may discuss with them include:

• Refinancing – You may be presented with the option to refinance. In short, refinancing entails revisiting the terms of your loan with the same lender or a new lender. If you can refinance on your own, your original cosigner will be removed from the loan entirely. If you’re refinancing with an improved credit score, you might be able to get a better interest rate!
• Cosigner Release – Examine the terms and conditions of your loan. Often, there is a ‘cosigner release’ option you could pursue. Provided that you’ve made enough on-time payments on your own, your lender might allow you to remove the cosigner after a certain point.
• Sell the Car and Pay Off Your Loan – If you really need to remove the cosigner from your loan but have been unsuccessful with the aforementioned methods, you could try to sell the vehicle and pay off the loan early with the funds. Of course, this is only recommended if you have positive equity, i.e. your car is worth more than what you still owe on the loan.

Learn More About Auto Loans with BMW of Murrieta

For all of your car financing needs, BMW of Murrieta is here with information and advice you can trust. Connect with us or visit us on your way home from Ontario today with any additional questions about your auto loan!