If you’re trying to buy a car but your credit history is short or bruised, a lender will probably ask you for a cosigner, but as time goes on, that setup might stop making sense for you. Whether your cosigner needs to free up their credit or you’re simply ready to handle the bills on your own, you aren't stuck. Find out how to get a cosigner off a car title below!
Key Takeaways
- Cosigners make getting a car possible, but they take on the exact financial risk that you do.
- Dropping a cosigner depends on your financial situation and your lender's rules.
- Paying off the balance, refinancing the car by yourself, or selling the vehicle are some options for removing a cosigner from your contract.
What Are Some of the Best Ways to Remove a Cosigner
Getting a cosigner off a loan takes some effort because banks don't like giving up a safety net. Having two people responsible for a loan means the bank is much more likely to get paid. Even so, you can use a few common strategies to move the loan entirely into your own name.
1. Ask the Lender to Release the Cosigner
Some banks build a "cosigner release" option right into the original loan agreement, though it isn't incredibly common. If your loan has this clause, you have to fill out a form and prove to the lender that you can handle the payments completely by yourself.
For this to take place, lenders want to see a solid history of consistent, on-time payments (usually 12 to 24 months' worth). Your personal credit score also needs to stand on its own. If your credit has improved since you first drove the car off the lot, you have a much better shot. An approval isn't always a guarantee. Lenders hate losing a backup plan, so many will say no or make the requirements incredibly tough to meet.
2. Pay Off the Balance
The fastest way to take a cosigner off a loan is to finish paying the loan. Once the balance hits zero, the contract is over, and your cosigner is off the hook. There is no approval process or credit check to worry about here, which makes it the cleanest solution. Just call your lender first to ask for an official payoff amount and make sure they don’t charge any early payoff fees.
3. Refinance the Loan Only in Your Name
If your income and your credit score have gone up since you bought the car, refinancing is possible. However, refinancing can come with extra fees, and if you stretch the loan out for more months to get a lower payment, you might end up paying more interest in the long run. Make sure to read the fine print.
4. Selling the Vehicle Car
Selling the vehicle takes care of the car, the loan, and the cosigner all at once—you use the money from the sale to pay the bank, so everyone can walk away. The only trick here is making sure you aren't upside down on the loan. If the car is worth more than what you owe, you can pay off the bank and keep the leftover cash for your next ride. But if you owe more than the car's actual market value, you will have to pay the difference out of your own pocket to clear the title and close the loan.
Taking Your Next Steps
Using a cosigner is a great tool when you need a helping hand, but qualifying for a loan on your own avoids a lot of personal and financial hurdles down the line. If you have questions about how car financing works or want to look at your options, our sales team is always here to talk it through. Contact our St Pete Mitsubishi finance team today!