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 goal is to help you make better financial choices by providing you with interactive tools and financial calculators that provide objective and original content, by enabling you to conduct research and compare information for free to help you make informed 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 Make Money The products that are featured on this site are from companies that compensate us. This compensation can affect the way and where products appear on this website, for example such things as the sequence in which they appear within the listing categories and other categories, unless prohibited by law. This applies to our mortgage, home equity and other home lending products. However, this compensation will affect the information we publish, or the reviews that you see on this site. We do not include the entire universe of businesses or financial deals that might be available to you. SHARE: Tony Anderson/Getty Images
2 minutes 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 editing and writing for Bankrate since the end of 2021. They are committed to helping readers to manage their finances through providing clear, well-researched information that breaks down complex topics into manageable bites. The Bankrate guarantee
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Therefore, this compensation may affect the way, location and when products appear within listing categories 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 can also impact the manner in which products appear on this website. While we strive to provide an array of offers, Bankrate does not include specific information on every financial or credit products or services. Making a deal with a co-signer may seem like an ideal idea at first however, in certain instances the plans might not be as successful as you had hoped. There could be a conflict between primary co-signer and the borrower could change or the financial situation of the co-signer could change and, consequently, the co-signer wants to walk away from the arrangement. While it is possible to benefit from the loan but swapping one co-signer for another on the original loan is unlikely. The procedure is more complicated and may require refinancing the loan, completing co-signer release documents or paying off the loan in full to end the involvement of the co-signer. It isn’t possible to replace your current auto loan co-signer. Most lenders will not simply replace a current co-signer by a different one on an existing car loan as it requires that they undergo the approval process for a . Although it’s never hurt to inquire with the lender regarding this possibility, swapping one co-signer for one on an existing loan is not standard practice. The process typically applies to the conditions and terms of the loan and isn’t designed or meant for modifying the parties who signed on to the loan. Refinancing could eliminate a co-signer from your car loan and permit the creation of a new one. A different option to eliminate a cosigner of an auto loan can be to just . Also, create a new loan that pays off the balance of the loan and closes the account. The new loan can be opened with an entirely new lender and is able to be completed without the involvement of the co-signer. In some cases, it may be opened by the same lender — though this isn’t always feasible. To do this, you need to be eligible for an entirely new loan by yourself that requires a great credit score and a track record of paying. If you’ve had a problem since first purchased the vehicle, refinancing may also present the chance to get the most competitive interest rate or revised loan conditions. Bankrate’s tip: If your credit score isn’t at par then you may want to consider locating someone you can feel confident in asking them to sign for a new loan. The removal of the co-signer on your auto loan could be an option. Though not all lenders offer this option, it’s possible in some cases to eliminate a co-signer through completing a co-signer release. Contact the lender: Your first step is to get in touch to the lender who funded the loan and inquire if it offers a co-signer release option. Make sure you have the proper paperwork in place If you are offered a release option by the lender offers a release option it is common to fill out paperwork that strips the co-signer of the loan and is the borrower who is accountable for the paying back the loan. Only the primary borrower has the right to change the terms of the loan. The lender’s approval is not a assurance that the lender will approve the release of the co-signer. You must prove that you are able to manage the loan by yourself by proving you have a satisfactory credit score and the financial resources to continue repayment. If you make this change, your loan period could be altered. The removal of a co-signer can alter the interest rate on your loan especially if the loan was initially granted based on the co-signer’s excellent credit. The final word is that switching or removing a co-signer on an auto loan is not as simple or as simple as it may sound. In most cases, you’ll need to , pay it off altogether or proceed with signing a release of co-signer — if the lender even offers this option. Think carefully before asking anyone to co-sign on a loan for you, in the first place and be sure you select the person you feel comfortable with. Find out more
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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 editing and writing for Bankrate from late 2021. They are committed to helping readers gain the confidence to take control of their finances through providing concise, well-studied and well-researched content that dissects complicated topics into digestible pieces.
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