What to know about switching co-signers on a car loan Part Of Financing a Car With a Co-Signer In this series Financing a Car With a Co-Signer Advertiser Disclosure Advertiser Disclosure We are an independent, advertising-supported comparison service. Our mission is to help you make smarter financial decisions by offering interactive tools and financial calculators as well as publishing high-quality and impartial content. We also allow you to conduct your own research and compare data for free to help you make sound financial decisions. Bankrate has partnerships with issuers, including but not limited to, American Express, Bank of America, Capital One, Chase, Citi and Discover. How We Earn Money The offers that appear on this site are from companies that compensate us. This compensation may impact how and where products appear on this site, including such things as the sequence in which they appear in the listing categories, except where prohibited by law. This applies to our mortgage or home equity products, as well as other home loan products. This compensation, however, does have no impact on the information we publish, or the reviews that appear on this website. We do not contain the universe of companies or financial offers that may be available to you. SHARE: Tony Anderson/Getty Images
2 min read published 12 September 2022
Written by Mia Taylor Written by Contributing Writer Mia Taylor is a contributor to Bankrate and an award-winning journalist who has two decades of experience and worked as a staff reporter or contributor for some of the nation’s leading newspapers and websites including The Atlanta Journal-Constitution, the San Diego Union-Tribune, TheStreet, MSN and Credit.com. Edited by Rhys Subitch Edited by Auto loans editor Rhys has been writing and editing for Bankrate since the beginning of 2021. They are committed to helping readers to control their finances with concise, well-studied information that breaks down complex subjects into digestible pieces. The Bankrate promises
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Therefore, this compensation may impact how, where and when products are listed and categories, unless it is prohibited by law. This is the case for our mortgage, home equity, and other home loan products. Other factors, like our own proprietary website rules and whether a product is available within your area or at your own personal credit score may also influence the way and place products are listed on this site. We strive to provide an array of offers, Bankrate does not include details about every credit or financial product or service. It may appear to be an ideal idea at first however in some instances, plans may not be as successful as you had hoped. There could be a conflict between principal borrower and the co-signer may be strained, or the finances of the co-signer might change and, consequently the co-signer might want to walk to get out of the contract. While it is possible to from a loan just by swapping one co-signer for another one on the original loan is unlikely. The process is more involved and can involve refinancing the loan or completing co-signer releases forms or paying the loan completely to end the involvement of the co-signer. It isn’t possible to simply substitute your current auto loan co-signer. Most lenders will not just swap a current co-signer with a new one for an existing auto loan as it requires the lender to go through the approval procedure for the swap . Although it’s always a good idea to ask your lender about this possibility, swapping one co-signer for another on an existing loan is not a standard procedure. This procedure is typically confined to the conditions and terms of a loan and isn’t designed or meant for modifying the parties who signed on to the loan. Refinancing may get rid of a co-signer for your car loan and permit an entirely new loan. Another option to eliminate a cosigner for an automobile loan can be to just . That is, you can create a new loan that pays off the balance of the loan and closes the account. The new loan can be opened with the help of a new lender and may be opened without the co-signer’s involvement. In certain cases it is possible to open it by the same lender however it’s not always feasible. To accomplish this, however you must be able to qualify for the new loan by yourself that requires a great credit score and payment history. If you’ve had a problem since first buying the car refinancing could provide an opportunity to obtain the most competitive interest rate or to modify loan conditions. Bankrate’s tip: If your credit score isn’t up to scratch then you may want to consider locating someone you can are at ease asking them to co-sign a new loan. Removal of the co-signer from your auto loan may be an option Although not all lenders provide this option, it is possible to eliminate a co-signer through completing a co-signer release. Contact the lender: Your first step is to communicate to the lender who has financed the loan and find out whether it offers a co-signer release option. Complete the required paperwork: If you are offered a release option by the lender provides a release option it is common to fill out paperwork that strips the co-signer of the loan and will make you the principal borrower accountable for the paying back the loan. Only the primary borrower has the right to alter the terms of the loan. Lender approval: There’s no assurance that that a lender will accept the release of the co-signer. You will need to prove that you are able to manage the loan on your own and have a good credit score and sufficient funds to continue repayment. When making this type of alteration, your loan period could be altered. Eliminating a co-signer may also alter the interest rate on your loan especially in the event that the loan was originally accepted based on co-signer’s credit score. The main point is switching or removing a co-signer on the car loan isn’t as easy or as simple as it seems. Often, you will need to , pay it off altogether or follow the procedure of making a co-signer release- if the lender even allows this option. Think carefully before asking anyone to co-sign on a loan for you, in the first place and be sure you select someone you trust. Learn more
Written by Contributing Writer Mia Taylor is a contributor to Bankrate and an award-winning journalist who has two decades of experience and worked as a staff reporter or contributor for some of the nation’s leading newspapers and websites including The Atlanta Journal-Constitution, the San Diego Union-Tribune, TheStreet, MSN and Credit.com. The article was edited by Rhys Subitch Edited by Auto loans editor Rhys has been writing and editing for Bankrate from late 2021. They are dedicated to helping their readers gain the confidence to manage their finances through providing clear, well-researched information that break down complicated subjects into bite-sized pieces.
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