How To Remove A Cosigner From A Car Loan

A cosigner may be necessary to get your loan authorized if you’re purchasing a car with little or no credit. Usually, this is a person with good credit who accepts responsibility for the loan and takes over payment responsibilities in the event that you are unable to.

A cosigner can make the difference in securing a car loan, especially when lenders are hesitant to approve your application on your own. But over time, having a shared loan can place financial pressure on both you and your cosigner. Even if your cosigner is ready to step away from the loan or you’d prefer to take full ownership, there are ways to move forward.

Here’s a closer look at how to remove a cosigner from a car loan and what steps to take next.

A co-signer is someone who agrees to take joint responsibility for a loan if the primary borrower is unable to make payments. In most cases, a co-signer has a strong credit history and steady income, which can help the borrower qualify for a loan they might not get on their own, especially if they have poor or no credit.

Lenders see co-signers as an added layer of security, knowing there’s someone else legally responsible for repaying the loan. Co-signers are commonly used for auto loans, personal loans, student loans, and other types of financing. As it can be a generous act, co-signing also means the individual’s credit and financial health are on the line if payments are missed.

Yes, removing a cosigner from your car loan is possible but it’s not always simple. Lenders often prefer having a cosigner involved because it reduces their risk and ensures there’s someone else responsible if payments are missed.

Taking the cosigner off the loan means you’re the only one liable for making monthly payments, which can make lenders more cautious. To qualify for cosigner removal, you’ll likely need to show that your financial situation has improved since the loan was issued. That could mean a stronger credit score, higher income, or a consistent record of on-time payments.

There are several personal and financial reasons why you might consider removing a cosigner from your car loan.

Changes in your relationship
In many cases, people ask their partner, friend, or family member to cosign a loan. If that relationship changes, such as after a breakup, divorce, or falling out, it might make sense to remove them from the loan. Even if the relationship remains strong, removing a cosigner can ease any pressure that shared financial responsibilities may create.

Protecting credit health
Another reason to remove a cosigner is to protect their credit or your own. If you’re having trouble keeping up with payments, missed deadlines can impact your cosigner’s credit score, since the loan appears on both credit reports. If your cosigner is planning to take on new debt, such as a mortgage or loan, reducing their debt-to-income ratio by removing them from your auto loan could improve their chances of approval.

Improved creditworthiness
Sometimes, you no longer need a cosigner simply because your credit has improved. You may have needed their support when you had little or no credit history, but with consistent payments and financial growth, you may now qualify to handle the loan on your own. In this case, removing a cosigner gives you full ownership of the loan and your financial progress.

There are several options to consider if you want to get a cosigner off of your auto loan. Your credit profile, lender policies, and overall financial health will determine the best course of action.

Here are four main approaches to progress:

1. Request a cosigner release

Some lenders offer a cosigner release option, which officially transfers full responsibility of the loan to the primary borrower. This usually requires a formal request and documentation showing consistent on-time payments and improved credit.

However, not all lenders offer this option, and those that do may set strict conditions like requiring a certain number of successful payments before even considering your request. Check your loan agreement to see if a cosigner release is mentioned and contact your lender to learn about eligibility requirements.

Strong credit and a stable income can increase your chances of approval if your lender allows this option.

2. Pay off the loan

One of the most straightforward ways to remove a cosigner is by paying off the loan in full. Whether you make a lump-sum payment or accelerate your monthly payments, this method ends the loan completely and your cosigner’s responsibility along with it.

Paying off your car loan early may also help you save on interest. But keep in mind that some lenders charge early repayment fees, so check with your lender to understand the terms before moving forward.

Related: How To Pay Off A Car Loan Early

3. Refinance the loan

Refinancing your car loan involves replacing your existing loan with a new one, usually under your name only. This option is ideal if your credit score and income have improved since the original loan.

Benefits of refinancing may include:

• Lower monthly payments
• A better interest rate
• A shorter loan term
• The chance to switch lenders

However, refinancing may involve fees or lead to a higher loan amount if your vehicle’s value has dropped. Make sure to compare offers and consider getting your car appraised before applying.

Related: What is Car Loan Refinancing?

4. Sell the vehicle

Another approach to get rid of a cosigner is to sell your present automobile and use the money you make to pay off the loan if you’re already going to buy a new one.  Selling the car can be beneficial if it has positive equity, meaning it’s worth more than what you owe. This can not only clear the loan but possibly leave you with extra funds.

However, if you owe more than the car’s market value, you may need to cover the difference out of pocket. Be sure to evaluate your equity position before deciding to sell.

Related: How To Sell A Car With A Loan

The effect of removing a cosigner from your auto loan largely depends on your current credit standing. If your credit has improved enough to qualify for the loan on your own, especially at a similar or better interest rate, the impact on your credit score is likely to be minimal.

Take note that if you want to refinance the loan in your name, the lender will probably conduct a rigorous credit investigation, which may cause your score to temporarily drop. This is a typical step in the refinance process, and with careful payments, it normally evens out over time.

However, if your credit is still in the lower range, removing the cosigner could lead to a loan with a higher interest rate. While that alone doesn’t damage your credit, the larger monthly payments can put added pressure on your budget. If you fall behind on payments, your credit score could take a hit.

Before you move ahead with removing a cosigner, it’s smart to evaluate your financial situation honestly. Make sure you can handle the monthly payments on your own, especially if refinancing results in a higher rate.

As it’s technically possible to remove a cosigner at any point during your auto loan, timing plays an important role. Some lenders include specific requirements in the loan agreement, such as making 24 consecutive on-time payments, before they’ll even consider a cosigner release.

Even if your lender doesn’t have a minimum waiting period, it’s often smart to hold off until your financial profile is strong enough to stand on its own. This means building a solid credit history, raising your credit score, and showing steady, sufficient income. Demonstrating that you can manage the loan independently can improve your chances of approval, whether you’re applying for a cosigner release or refinancing.

Waiting until you’re financially ready helps ensure that the transition won’t lead to a higher interest rate or monthly payment.

Being prepared in advance will help the procedure go more smoothly and successfully if you intend to remove a cosigner from your auto loan. The following useful advice will assist you in making the appropriate decisions: 

Work on improving your financial profile
Before approaching your lender, focus on building strong credit and financial stability. Lenders are more likely to approve a cosigner release or refinancing request when the primary borrower demonstrates financial independence. Pay bills on time, keep your credit utilization low, and aim to increase your income if possible.

Stay consistent with car payments
Making timely monthly payments on your auto loan is essential. Not only does it keep your account in good standing, but it also shows lenders that you can manage the loan responsibly on your own. A solid payment history also strengthens your case when applying for refinancing or requesting a cosigner release.

Communicate with your lender
Lender policies vary, so don’t assume the process will be the same everywhere. Contact your loan provider to ask about your options for removing a cosigner. They can explain their requirements and may even help you determine the best route based on your current financial situation.

Be cautious about using a cosigner again
As a cosigner can help you qualify for loans when your credit is limited, it’s a big commitment for both parties. It’s worth thinking twice before involving someone else in future loans. If you can qualify for credit on your own, it’s often the better and cleaner route.

Removing your name from a car loan when the other borrower isn’t willing to cooperate can be a challenge, especially when the relationship between the two parties has broken down. Unfortunately, loan agreements don’t simply dissolve along with personal ties. Whether you’re listed as a cosigner or co-borrower, the financial responsibility remains until the loan is officially modified or resolved.

Work through legal channels if necessary
If you’re dealing with a divorce or separation, it’s important to involve your attorney. Your divorce lawyer can include provisions about the auto loan in the separation agreement. This legal document can detail which party is responsible for payments and what actions must be taken to resolve the loan. It can also include consequences if one party fails to follow through.

Review the vehicle title
Check the wording on the vehicle title to understand your options. If the title uses terms like “or” or “and/or” between names, that small detail may give you the ability to act independently when it comes to transferring ownership or making decisions about the vehicle.

Seek professional guidance
In emotionally and financially complex situations, such as shared car loans after a breakup, it’s often helpful to speak with a financial advisor or attorney. They can help you explore the best way to exit the loan while minimizing damage to your credit and protecting your legal rights.

Removing a cosigner from a car loan can feel overwhelming, but with the right preparation and financial standing, it’s absolutely achievable. Even if you’re opting for refinancing, applying for a cosigner release, paying off the loan, or selling the car, each method comes with its own set of steps and considerations. Before moving forward, take time to strengthen your credit, review your lender’s policies, and assess your financial readiness. 

By taking a strategic and informed approach, you can successfully remove a cosigner and take full control of your auto loan, setting yourself up for long-term financial independence.