Can a co-signer be removed from a car loan?

Quick insights

• A co-signer may want to be removed from an auto loan for several reasons.
• Co-signers cannot remove themselves from a loan or be removed by the primary borrower.
• A co-signer’s obligation is eliminated when the loan is paid off or refinanced without their involvement.

Making a major purchase like a car often requires financing. To qualify, a co-signer might have to agree to share joint responsibility for the loan.

Why would a co-signer be removed from an auto loan?

A co-signer may want to be removed from a loan for a number of reasons. Maybe the primary borrower is not paying on time, and the co-signer is stressed by the obligation. Another possibility: The co-signer’s ability to qualify for a new loan of their own is adversely affected by the co-signed debt.

On the other hand, the primary borrower may be the one who would like to remove the co-signer. If interest rates have gone down since the original loan was obtained, for instance, it might be a good time to refinance at a lower rate. And if all payments on the existing loan were made on time, the primary borrower's credit may have strengthened, eliminating the need for a co-signer and allowing the primary borrower to stand alone.

Can a co-signer remove themselves from a car loan?

In general, the terms of the co-signed loan cannot be undone. To reverse the co-signer’s obligation, the co-signed loan must be paid off, or refinanced, with or without a new co-signer.

How to remove a co-signer from a car loan

Removing a co-signer from a car loan requires the loan to be paid off. If there’s a balance remaining, that amount must be refinanced. The primary borrower could possibly qualify alone, or a new co-signer may be needed.

Do you have to remove a co-signer from a car title?

Co-signers are not usually shown on a car title, so they do not have to be removed. While a car is being financed, the lender is listed on the title. Soon after the car loan is paid in full, the borrower should receive the title in the mail with their name. If needed, a state DMV office or titling agency can typically handle changes needed to a vehicle title.