How to Remove a Co-Signer From an Auto Loan

Many people require the aid of a co-signer to acquire a car loan for a variety of reasons --- no credit history, a bad credit history or no down payment. Sometimes the co-signer might ask to be removed from the loan, or individuals who have been responsible in making payments wish to take full accountability for the loan. Removing a co-signer from a car loan is possible, but not easy to accomplish. Lenders might require a new down payment or refinancing to accomplish this goal.

Instructions

1

Review the terms of your current auto loan, and make note of the interest rate and other factors that could affect your payment scale if the co-signer is removed. Obtain a copy of your credit report and verify your credit score. Review your personal budget to determine if your finances will allow you to put a down payment on the loan if the lender agrees to remove the co-signer under that condition.

2

Contact your lender, explain the situation and ask if you can refinance the current loan under your credit alone. Expect the lender to be reluctant to do so, and be prepared to offer reasons why the lender should consider it, such as your good payment history or improved credit ranking. Ask what requirements your lender has for removing co-signers.

3

Consider contacting other lenders if your current lender is unwilling to assist you in your request. Apply for a new loan under your credit alone to replace your shared loan, but expect to qualify for higher interest rates and see a drop in your credit score afterward.

4

Request documentation that the co-signer has been removed from the loan. If you received a new loan, make certain your original lender sends paperwork stating that the old loan has been paid in full. Share copies with your former co-signer and file these documents for safekeeping.

5

Have your co-signer check his credit report. The loan should no longer appear as active under his name. Dispute it with the credit reporting agency and the lender if the loan still appears on the co-signer's credit report as anything other than "paid in full, closed" after six months.