A joint auto loan is one where two co-borrowers share the responsibility of paying for a car loan. You both apply together and the lender combines your incomes to qualify you for financing. However, some situations can arise which may leave you wanting your name off a joint auto loan.
Removing Your Name From a Joint Auto Loan
Taking your name off a car loan. Common reasons someone may want their name off a joint car loan include divorce, separation, or the other borrower not holding up on their end of the deal.
Each of these situations could be hurting both of your credit scores. If there’s bad blood between you and the co-borrower, and someone stops paying because of it, your credit scores could really suffer unless the situation is resolved. In joint auto loans, both parties' credit scores are affected by the loan, both positively and negatively depending on how the loan is treated.
If you need to get out of a joint car loan, you typically have two options: refinance your auto loan or sell the vehicle.
- Refinance. If one co-borrower wants to keep the car and one wants their name removed from the loan, they can try to qualify for refinancing. Refinancing is replacing the current auto loan with another one. Because refinancing means creating a whole new loan for the vehicle, one party can remove their name and make the other person the sole borrower. Most borrowers look for another lender to refinance with, but you may be able to refinance with the same lender that you both originally took the loan out with if you qualify.
- Sell the car. If neither of you wants to keep the vehicle, it can be as easy as selling the car privately or trading it in to a dealership, having both of you sign the title, and removing the lien from it. Remember that you can’t sell a vehicle that still has a loan on it until the lien is removed. Removing the lien means paying off your entire loan balance. If you can sell the vehicle for what you owe on the loan (or hopefully more), the payoff amount goes to the lender, who removes the lien and you both can take your names off the title and relinquish ownership.
Cosigners on Auto Loans
Is a cosigner part of a joint auto loan? If you are a cosigner on someone else’s auto loan, it’s not considered a joint car loan. When you cosign for someone, they’re the primary borrower who's fully responsible for repaying the loan.
If the primary borrower sells the vehicle, both of your names are removed from the loan contract. However, while you act as a backup payer, you don’t get rights to the car. This means you can’t force the primary borrower to sell the vehicle to remove your name from the loan if they don’t want to.
You can, however, try to convince them to refinance and remove your name from the loan if they want to keep the car. You can get put in a rough spot if the primary borrower is missing payments and harming both of your credit scores since you can’t repossess or take possession of the vehicle – your name isn’t on the title. With co-borrowers, both borrowers have their names on the car title so they have equal ownership of the vehicle.
Primary borrowers can try to qualify for refinancing to remove their cosigner. If you’re a cosigner and you want your name off the loan, have a talk with the primary borrower about your concerns. Remember that both co-borrower and cosigner situations affect both of your credit scores, so communication is key, no matter who wants out of their responsibilities on the loan.