Does the Title of the Car Remain in the Co-Signer's Name?

A co-signer is a person who is equally liable for a car loan debt, but who is not necessarily a car owner or entitled to use the car. Whether a co-signer's name remains on the title or is ever on it in the first place depends on the conditions of the loan and the agreement between the co-signer and the debtor. Talk to an attorney if you need legal advice about the rights and obligations of co-signing a car loan.

Co-Signer

The co-signer is another person who agrees to pay back a loan in the event the borrower cannot. If the borrower and co-signer fail to pay back the loan, the lender can then sue both, or either individually to recover the unpaid funds as well as repossess the car and use its sales proceeds to pay for the debt.

Title

A car's title is the legal document that indicates who owns the car, very similar to a deed for a home or piece of real estate. The title lists the name of the owner as well as the name of any lien holder. A lien is a legal interest in the car that a lender takes as security in the event the borrower fails to repay. Once the borrower repays the loan in full, the lien holder releases the lien and the borrower can get the car re-titled in his name alone. If the borrower used a co-signer in the borrowing process, the co-signer's name is typically not included on the title.

Co-Owner

A co-owner is not the same as a co-signer, though a co-owner can act as a co-signer. If, for example, you and your spouse buy a car with a car loan as co-buyers, the car title typically lists both names on it. The car title will include both names with either an "or" or an "and" between them. If the car title lists the owner's names with an "or," either spouse can sell or transfer the car without the other spouse's permission. If there is an "and" between the names, both spouses must agree to any transfer.

Re-Titling

Whenever you buy or sell a car, the owner has to re-title the car in her name. If there are co-owners, the co-owners have to re-title the car in both of their names. If, for example, a borrower uses a co-signer on a loan and pays that loan off, the borrower can then have the car retitled in her name once the lender releases the lien. The co-signer's name doesn't appear on the title. However, if the co-signer is listed as a co-owner, the co-owner's name must also appear on the title after the lien release by the creditor.