How to Get the Co-Signer Off a Finance Deal

The bank may require a co-signer if the borrower is not creditworthy.

If you are unable to purchase a car, buy a home or obtain a loan because of bad credit, you can often do so if you have someone to co-sign for the loan. However, there may be reasons to eventually remove the co-signer. He may want you to remove him because he is afraid you will default on the loan and he will be responsible for paying it back. Perhaps you are having relational problems with the co-signer and no longer wish to have him involved in your affairs. Whatever the reason, there are several ways to remove the co-signer from a finance deal, although this is not an easy process.

Instructions

1. Ask the lender to remove the co-signer from the loan. Offer to put more money down on the loan if your income or credit score has substantially increased.

2. Refinance the loan as most lending institutions require you to refinance if you want to remove the co-signer from the loan. Reapply for the loan but remember you will have to qualify based on the lender’s criteria. Arrange to refinance the loan by replacing one co-signer with another. Opt to refinance with the same lender or a different lender.

3. Pay off the loan as doing so absolves the co-signer of any responsibility to repay the loan.

Tips & Warnings

• Be prepared for the lending institution to deny a direct request to remove a co-signer. Most lending institutions have strict policies in regard to loans and co-signers. You may have better luck with such a request if your loan was issued at a small-town, independent bank.

• Paying off the loan may be the only way to solve the problem if the lender won't remove the co-signer and you are unable to refinance the loan.

References

• Bankrate; How to remove a co-signer from a car loan; Tara Baukus Mello
• Bankrate; Switching Co-signer on a Car Loan; Terry Jackson