Can You Remove a Cosigner from a Car Loan?

Getting approved for an auto loan isn’t always easy, but with the right help, almost any Cannon Falls or Zumbrota driver can find a way to move forward. Adding a cosigner is often the smartest way to take the next steps, but it always pays to understand your options. 

Can you remove a cosigner from a car loan? You might have to jump through a few hoops, but the answer is usually yes! Restrictions and options vary from lender to lender, but most offer some means for you to adjust your loan or contract. Find out how to remove a cosigner from a car loan today!

What’s the Purpose of a Cosigner on a Loan?

Adding a cosigner is one of the best ways to shore up your bad credit auto loan application and make yourself look like a smarter investment, whether you decide to buy or lease. Here’s why: 

• If your credit is low due to missed payments or a high debt-to-income ratio, adding a second name to the dotted line proves that someone else trusts you to pay back the loan. 
• This creates a protective buffer for the lender because the partner is supposed to step in and make payments if you fall behind.
• However, the process also 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 your record! 

Even if you’re always on time, 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 on a project nearer to their heart.

How to Remove a Cosigner From an Auto Loan

Removing a cosigner from an auto loan is almost always possible. If you’ve tried contacting your lender by phone, and you’re still not sure of how to remove a cosigner from an auto loan, you’ll want to discuss the following options with your lender:

• Refinancing Your Loan – ‘Refinancing’ is shorthand for working out new loan terms with the same, or another, lending partner. If you’re able to refinance by yourself, your cosigner’s name will be removed, and you might even secure a better interest rate. Try this option if your credit has gone up since you initially took out the loan.
• Cosigner Release – Go over the fine print of your contract and see if there’s a cosigner release option for you to explore! If you’ve made enough on-time payments, some contracts will let you remove the cosigner’s name and eliminate their risk right away. 
• 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.

Get More Car Buying Tips From Red Wing Chevrolet!

Can you remove a cosigner from a car loan in Prescott? As you’ve seen, the answer is probably a solid “Yes!” If you’d like to talk through your options, or if you initially took out your loan with Red Wing Chevrolet, contact our financing department today to learn more.