Can a co borrower refinance a car loan?
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Video answer: How to take a co-signer off a car loan
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If the other co-borrower wants to keep the car and you want your name removed from the loan, they can try to qualify for refinancing… Most borrowers look for another lender to refinance with, but the other co-borrower may be able to refinance with the same lender that you both originally took the loan out with.
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If you have problems with your credit, you can always use a co-borrower for help in financing or refinancing a car. Most lenders allow this and will accept the higher of the two credit scores. But beware, the other borrower is on the hook for the payments if you don't pay, and her credit gets dinged if you pay late or if the car is repossessed.
Lenders want to see the least amount of risk present when approving auto loan refinancing. Adding a co-borrower with a better credit score may help you in one or more ways. You may qualify for better loan terms. This may mean a longer-term, which can extend your payment window, but reduce your monthly payment.
For making modifications to a co-signer agreement: When you refinance your loan, you can add a co-signer or eliminate your existing co-signer. In case your present co-signer no longer wants to provide a guarantee for your repayment, then you can remove their responsibility by getting a new loan from a different lender.
You can sell the vehicle and use the proceeds to repay the loan. Then the cosigner will be released from the debt since it has been repaid. Refinance car loan to remove cosigner – The principal borrower can refinance the auto loan in their own name to remove the cosigner. The borrower gets a new loan agreement possibly from a different lender.
Removing a Co-Borrower from a Car Loan A co-borrower is generally a spouse, and co-owns the vehicle with the primary borrower. Unlike a cosigner, a co-borrower's name is listed on the title, and they share equal rights to the car. Also, you can combine incomes with a co-borrower, which means removing them isn’t as easy as simply refinancing.
For example, if you have bad credit or no credit, having a co-signer can help you get approved for an auto loan. On the other hand, when income is the primary concern, taking on a co-borrower might be an option. A co-borrower (or co-applicant) also has ownership rights when it comes to the vehicle being purchased.
Depending on the situation, you may be able to remove a co-buyer's name from your loan if you request a loan modification or refinance the loan with another company. With either option, you also still need to visit the DMV to get the co-buyer's name off the title and registration. Understand Co-Borrower vs. Co-Signer
Whether you’re a cosigner or a co-borrower (or, for that matter, if you’re the only one listed on the loan at all), you can always try to refinance in your own name. This option has the added benefit of potentially allowing you to get better interest rates, different loan term lengths, and/or smaller monthly payments as well.
If you have a co-signer to an auto loan and want to refinance the loan in your own name, take the appropriate steps to remove any other co-signer before assuming the full financial responsibilities of a new loan. The lender will review your credit and require you to demonstrate proof of your ability to pay off the obligation.
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