If you took out a bad credit auto loan with a cosigner and you want to take them off of it, how do you do this? Your cosigner can’t just abandon the responsibility of the loan they agreed to, but if you qualify for refinancing, you could remove the cosigner from the car loan yourself.
Refinancing Requirements to Meet
The main goal of refinancing is to lower your monthly payment, and you can do this in one of two ways: extend the loan term, or qualify for a better interest rate. When you refinance, you also get a chance to tweak your loan, such as being able to add or remove a cosigner.
Before you can remove a cosigner, you need to meet the lender’s refinancing qualifications on your own. You can choose to refinance with your current lender, or opt to refinance with a different one. Regardless, you need to make sure these requirements are met:
- Your credit score has improved – The first thing lenders look at is where your credit score stands since taking out the initial loan. If it’s gone up since then, you’re in good shape. If not, it’s still possible to qualify for refinancing, but you may only be able to extend the loan term and not get a better interest rate. However, this could still help you remove the cosigner.
- You’re current on loan payments – You can’t be missing any payments if you want to refinance. Make sure you’re up to date and not behind.
- Your loan amount meets the lender’s limits – Each lender has their own loan amount requirements, so make sure you check with them to see if you meet their threshold.
- At least a year has passed – If you took out a bad credit auto loan, lenders look to see that you're keeping up with your payments, and how long you’ve had the loan. Generally, at least a year needs to have passed in order to refinance. If you haven’t missed any payments, a lender is more likely to approve you for refinancing. If your history is a bit spotty, it’s possible a lender could turn you down.
Without these things, removing your cosigner could become a challenge – especially if you relied on them to help you qualify in the first place.
Vehicle Refinancing Requirements
In addition to meeting personal requirements for refinancing, your car needs to qualify, as well. The specific rules vary by lender, but you can expect them to follow these two when it comes to your vehicle:
- Age and mileage restrictions – Lenders have a cap on the age of a car they’re willing to refinance, as well as how many miles it can have.
- Equity – Lenders also want to make sure your vehicle has equity, or is worth more than what you owe on the loan. If you have negative equity, you’re not going to be able to refinance.
The Bottom Line
If you want to remove a cosigner from your current loan, the only way to do this is to refinance on your own. That means you need to wait until your credit score has improved. In addition, let your cosigner know that you plan on taking them off of the auto loan ahead of time.
If you’re not looking to refinance a car loan but need to take out a bad credit auto loan, we can assist with that. Here at The Car Connection, we connect consumers to local dealerships that know how to help people in unique credit situations.
Don’t go from dealer to dealer only to get turned down. Begin here with us, instead! Complete our car loan request form to get the process started.