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Mikael Vaisanen/Getty Images October 21, 2022 Rhys has been editing and writing for Bankrate since late 2021. They are passionate about helping readers gain the confidence to take control of their finances by providing clear, well-researched information that breaks down otherwise complex topics into manageable bites. Bankrate logo The Bankrate promise
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Having a co-signer on an auto loan is a great way to by lenders if your credit score is less than ideal because it gives your lender added assurance that you will pay off the loan. But those with added financial responsibility alongside the main borrower may want to exit due to a variety of reasons. Refinance
One way to remove a co-signer from your loan is to . To do this you will take out an entirely new loan, possibly with a different lender. When you do this, the old agreement is closed and you start from scratch with a new loan that won’t be attached to the co-signer anymore. Refinancing can also be an opportunity to lower the interest rate on your car loan or even the monthly payment by extending the loan term. Keep in mind that in order to you will need to have been making your monthly payments on time and have good to excellent credit. Get a co-signer release
To get a co-signer release you will first need to contact your lender. After contacting them you can request the release — if the lender offers it. This is just paperwork that removes the co-signer from the loan and places you, the primary borrower, as the sole borrower on the loan. One of the drawbacks to this approach is that your initial loan term and interest rate may be impacted. This is especially true if your approval was dependent on your co-signer’s good credit. If the co-signer is released from the loan your lender may adjust your current terms. You will also have to show a history of timely payments before the lender y agrees to release the co-signer. It’s also important to note that not all loans include a a co-signer release option, so it’s wise to look into this prior to agreeing to a loan. Pay off the loan
The most painless way to remove a co-signer is to simply . If the removal is due to financial strain this may not be the most practical option but paying off the loan in full will rid the responsibility of both the primary borrower and the co-signer. To do this, you will be expected to pay off the current loan balance along with the payoff amount. You will have to contact your lender for the specific methods of paying off your loan, especially if the pay-off timeline is earlier than initially agreed upon. Next steps
The removal of a co-signer can be a time-consuming process, so it’s best to think before agreeing to a . And you should only go ahead with a removal in very specific circumstances. If you do decide to proceed with removing a co-signer, research your options carefully to determine which approach makes the most sense for you. If you’re considering refinancing your loan or obtaining a co-signer release, review your credit score and payment history to make sure your financial profile will allow you to qualify for a loan on your own. SHARE: Rhys has been editing and writing for Bankrate since late 2021. They are passionate about helping readers gain the confidence to take control of their finances by providing clear, well-researched information that breaks down otherwise complex topics into manageable bites.