If you’ve been struggling with your credit, you might have needed a co-signer to qualify for an auto loan. However, if you’ve been paying on time and now have good credit, you might be able to remove your co-signer from the loan. There are several things that can make it difficult to do this, though—and some of them are things you think would help! Here’s what to know about removing a cosigner from your car loan.
Understand how an auto loan cosigner works
It’s important to understand how an auto loan cosigner works before you remove one. When a co-signer signs on for a car loan with the borrower, both parties are legally responsible for making payments on time and in full. If either party fails to do this, then both can be held liable for the loan.
A borrower can ask their lender to remove a cosigner from their account at any time—even after they’ve defaulted on their payments. However, some lenders may not honor such requests without first checking with the co-signer who signed off on the agreement in order to ensure that they’re OK with being removed from it as well. If this happens, you’ll need to contact your lender directly or start over by looking elsewhere.
If both parties agree that removing your cosigner would be beneficial—for example, because they don’t have income anymore due to illness or injury—the lender might agree as well if there aren’t other issues preventing them from doing so (like past delinquencies).
Keep in mind that removing someone does not absolve them of responsibility for previous missed payments; if anything goes wrong later down the line due to missing payments or another issue like fraudulence by either party involved here then all bets are off when it comes down who is responsible financially speaking.”
Talk to the lender
The first step in removing a cosigner from an auto loan is to talk to the lender and make sure they know you want them removed from your account. Don’t stop making payments, though—that could harm your credit score and lead to additional fees for late payments.
Lender-helpful ways to improve credit
- Pay bills on time.
- Get a secured credit card and use it to build your credit history.
- Use the credit card to buy things you need, like groceries or gas for your car, but don’t go overboard. Don’t charge things that you don’t need, such as DVDs and video games.
- Pay off the balance of the bill in full every month so you won’t pay interest charges on what you’ve borrowed from the bank.
- If possible, keep any new accounts open for at least six months before closing them; this will help show lenders that they can count on your financial reliability in these situations
Lender-unfriendly ways to improve credit
If you want to remove a cosigner, your best option is to improve your credit score. If you don’t already have good credit, there are some ways that can help:
- Pay off the loan
- Get a co-signer or a cosigner for another loan
- Get a co-borrower or a co-applicant on an existing loan
Make sure lender removes co-signer information from your credit report
Now that you’ve learned how to remove a cosigner from an auto loan, it’s important to make sure the lender is reporting accurate information about your account.
If you’re unsure whether or not the lender is reporting accurate information about your account, you can perform a free annual credit report from each of the three major credit bureaus (Equifax, Experian and TransUnion). Each bureau will show one version of their report for every consumer they track. If yours doesn’t match up with what was reported by your lender’s servicer, contact them immediately so they can correct it. You should also check with other lenders who may have pulled this incorrect information; if they see it on their own reports or associated with another loan application in their system, they might freeze up when working with you in future deals!
Taking a cosigner off your loan is not always as simple as making payments on time
- Making payments on time is important. If you have an auto loan, and the cosigner should be making the payments with you, then it’s great that your credit score is high and that you’ve been paying on time. But if the cosigner has stopped making payments and/or is no longer living at the address listed on the loan agreement, then it’s likely that one of two things will happen:
- The lender will want proof from both parties that they have agreed to remove their names from the loan (a cosigner release letter), or
- The lender will attempt to contact both parties separately to see if either party wants to make all future payments themselves or allow them to go into default (which could negatively impact both of your credit scores).
It’s possible to remove a cosigner from an auto loan. But it may not be that simple. If you pay your auto loan on time, the lender will likely remove the cosigner. But if your credit history or credit score isn’t up to par, the process might be more challenging. Still, there are ways to improve your credit and get yourself in a position where you can buy a car without help from another person. Use this guide as your blueprint for navigating the step-by-step process of removing an auto loan cosigner.