Can You Remove a Cosigner from a Car Loan?

Car Loan
 

Congratulations! You’re ready to purchase a new vehicle and you’re trying to get an auto loan to help you achieve more freedom. Getting approved for an auto loan isn’t always easy. However, most South Riding or Centerville drivers can find a way to move forward with an auto purchase. One way to do this comes from adding a cosigner to the loan. But you’ll need to understand your options first when you get a helper to assist you.

 

 

Can you remove a cosigner from a car loan? Yes, but you must pay close attention to the regulations and paperwork of the loan. You can always ask before you sign the papers. But the answer is usually yes! Restrictions and options vary from lender to lender. Most Chantilly lenders offer ways for you to adjust your loan or contract after you purchase your vehicle.

Our guide from Mercedes-Benz of Chantilly helps you find out how to remove a cosigner from a car loan.

What Is the Purpose of Having a Cosigner on an Auto Loan?

Adding a cosigner to an auto loan can shore up your application if you have less-than-ideal credit. It also makes your loan look like a smarter investment for the lender if you’re buying or leasing, whether you choose a new or pre-owned vehicle.

Here’s why:

  • If your credit score is low due to missed payments or a high debt-to-income ratio, adding a second name to the loan proves that someone else trusts you to pay back the loan. Your cosigner is essentially helping you take responsibility for making payments.
  • A cosigner creates a protective buffer for the lender because the partner is supposed to step in and make payments in the event that you fall behind. Someone else’s better credit can benefit you. But you must keep up with the payments.
  • One thing to watch is that the process 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 the cosigner’s record and not just yours. Be careful when adding a cosigner to a loan because someone else’s credit is also on the line.

Even if you’re always on time with your payments, you or your partner might still wonder how to remove a cosigner from a car loan. After all, the amount of debt in their name could prevent them from taking out another loan or moving forward with a project in the future. Sometimes, it doesn’t make sense to have a cosigner anymore.

How to Remove a Cosigner From a Car Loan

Can a cosigner be removed from a car loan? Lenders almost always have a way to do this. Communication is the key! The first step is to contact your lender by phone and talk to a customer service specialist. That loan professional can answer all of your questions.

Discuss the following options with your lender when removing a cosigner from an auto loan:

  • Refinancing Your Loan – Refinancing means you work out new loan terms with the same lender or a new auto loan company. In the event you can refinance your auto loan by yourself, your cosigner’s name won’t have to be on the loan this time around. You could even secure a better interest rate because you’ve been on time with payments for your auto loan to this point. Try this option if your creditworthiness has gone up since you initially took out the loan, which is a distinct possibility if you make payments on time and maintain a good financial relationship with the lender.
  • Cosigner Release – Go over the fine print of your initial loan contract. See if there’s a cosigner release option! If you’ve made enough payments on time, some contracts will let you remove the cosigner’s name and eliminate their risk as soon as you can. Remember, each lender is different. You can always ask the lender before signing the papers.
  • 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. You might need your cosigner’s permission to sell the vehicle first. You should also check with your state’s laws regarding the titling of the vehicle.

Test Drive Your Next New Vehicle at Mercedes-Benz of Chantilly!

Now you know how to remove a cosigner from an auto loan from a top car dealership near Ashburn. Ready to drive away with your dream car? Contact us or call (888) 837-9454 to schedule a test drive. We’re happy to help put you in a new or pre-owned vehicle!

Meanwhile, look over our new vehicle specials to see if you can find the right vehicle at a smart price. We think you’ll be impressed with everything we have on our lot!

 

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