Most lenders do not allow borrowers to remove a co-owner. If you have applied for a new loan without a co-owner, you are refinancing your current loan, in which case, your cosigner is removed instantly. You must have your cosigner's permission and signature to remove him from your loan.
Removing the Cosigner
If your lender allows you to remove your cosigner, the process should take only as long as it takes your lender to process your paperwork. If your lender isn't local, the process may take several weeks. If your lender is local, the process might be immediate. Your cosigner's signature is needed to remove him from your loan. Your cosigner may go to your lender's establishment to sign, but if your lender is not local, he will have to wait for the lender to mail his portion of the ownership transfer paperwork. The cosigner will have to mail the paperwork back, as original signatures are required.
Refinancing
If you had to refinance your loan to remove your cosigner, expect the process to take up to two weeks. You'll have to provide a credit application for loan approval, which can take up to a week. Also, your cosigner has to release ownership of the vehicle. Once you're approved for your loan without your cosigner, you must sign your loan contracts. If your lender is local, you can sign your contracts immediately. If the lender is not local, you may wait up to one week during the mailing and paperwork processing.
Considerations
If you're waiting for your vehicle's title, the time you can expect to wait depends on your state's motor vehicle department. You might be able to provide your lien paperwork and receive your title instantly. Some states do not offer instant titles, so you can expect to wait several weeks to receive it. Other states, known as title holding states, do not send a vehicle's title to the vehicle's registered owner. These states send the title to the lien holder instead. If you plan to sell your vehicle, you have to pay off your loan to receive the title for transferring and obtain your cosigner's signature.
Trade-ins
If you're trading in your car, your cosigner does not transfer to your new loan account. You can still trade in your vehicle while it has an open loan. You have to work with your cosigner to trade the vehicle toward another purchase. The dealership requires that the cosigner arrive at the dealership to sign her portion of the vehicle's title, or she may sign another form -- known as a power of attorney form -- that allows the dealer to sign on her behalf. This form often is used in title holding states.
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