Can You Remove a Cosigner from a Car Loan?

If you had some trouble getting financing for your car and needed a cosigner on your loan, you might be wondering if you can remove a cosigner from a car loan. The finance department at Thompson Cadillac in Springfield, Missouri, can help. Depending on your lender, you might need to do some work to adjust your loan terms, but yes, it is possible to remove a cosigner from a car loan. Read more to find out how, or contact us with your specific questions.

Why Have a Cosigner on a Loan?

If you have bad credit, adding a cosigner to your auto loan application is one of the best ways to get auto financing when you need it. Your cosigner is proof that someone trusts you to pay back your auto loan. It’s a vote of confidence in your good character. Having a cosigner also creates a protective buffer between you and your lender. Your lender has the safety net of knowing that, if you miss payments, the cosigner will be responsible for them. This does create a financial risk for a cosigner because your lack of payment can damage their credit score.

How to Remove a Cosigner From a Car Loan

There are several reasons why you might need to know how to remove a cosigner from a car loan, especially if being on your loan is causing your cosigner problems in getting financing for their own projects. It’s usually possible to remove a cosigner for a car loan. Here are some of the ways to do it:

• Refinancing Your Loan – This means working out new loan terms with the same, or another, lending partner. If you can refinance by yourself, your cosigner’s name will be removed, and you might even secure a better interest rate, especially if you’ve been making your loan payments on time, which can raise your credit score. Try this option if your credit has gone up since you initially took out the loan.
• Cosigner Release – Review the terms of your loan and see if there’s a cosigner release clause. 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.

Save Money with Thompson Cadillac

Now that you know how to remove a cosigner from a car loan, you might be thinking about trading in your car and buying a new one. Explore our selection of affordable used cars and find one that fits your budget. The team at Thompson Cadillac is here to help!