Can a Cosigner Become the Primary Borrower? (2024)

FAQs

Can a Cosigner Become the Primary Borrower? ›

Can a cosigner become the primary owner? If you are a cosigner on a car or other property loan, you don't have any right to own the property or assets if the primary borrower defaults. If the primary borrower defaults or can't make payments, you can try asking the lender to refinance with you as the primary borrower.

Additionally, a cosigner has no legal right to occupy a home as a primary or secondary residence, unlike the primary signer/borrower.

Switching or removing a co-signer on a car loan is not as simple or as straightforward as it sounds. Often, you will need to refinance your auto loan, pay it off altogether or go through the process of completing a co-signer release — if the lender even offers this option.

Ending a Cosigned Car Loan. As the cosigner, you can't remove the primary borrower from the loan. Unfortunately, since you have no legal rights to the vehicle, the primary borrower has to take the initiative to remove someone's name from the contract.

Remember that a co-signer is not on the title of the property and cannot take ownership of it.

Their Ownership Interest In The Property

Co-signers guarantee the loan, meaning they'll take over payments if you are unable to make them. They have no ownership interest in the property and can't decide to sell the property if they don't pay the loan.

No. It's important to remember that the co-signer has no rights under the mortgage, only obligations. Even if the primary is no longer making payments, the co-signer's only “right” is to make the payments themselves or allow the foreclosure to proceed.

Cosigners are people who guarantee debt for someone who cannot qualify for a loan on their own. The understanding is that the primary borrower is the person legally responsible for repaying what is owed. Co-borrowers, on the other hand, are people who want to take on a shared debt with another person.

Your best option to get your name off a large cosigned loan is to have the person who's using the money refinance the loan without your name on the new loan. Another option is to help the borrower improve their credit history.

Removing a cosigner or co-borrower from a mortgage almost always requires paying off the loan in full or refinancing by getting a new loan in your own name. Under rare circ*mstances, though, the lender may allow you to take over an existing mortgage from your other signer.

Can I repossess a car I cosigned on? ›

You have a few options if you've co-signed for a loan and the primary borrower is behind on payments. It's most important to understand that you do not have the right to repossess the car yourself. Instead, you'll need to either work something out with the primary borrower or continue making the payments to the lender.

You can remove the co-signer by refinancing your auto loan, receiving a co-signer release or paying off the loan. Before removing the co-signer, ensure your credit score is high enough to receive the same or comparable rate if you refinance.

You can often remove a cosigner at any point during the loan period. Your loan paperwork might dictate specific terms, though. For example, some lenders require 24 months of on-time payments from the primary borrower before they'll consider releasing the cosigner.

Co-signing means you are responsible for covering payments if the main borrower cannot, but you do not have any legal rights to the car. Co-owning means both parties have equal ownership and financial responsibility for the car.

THE BANK AND THE COURTS DO NOT CARE. All they care about is that YOU signed the loan, so as far as they are concerned YOU owe the money and you owe ALL of the money to the bank, and the only way to change that is to pay the money back. The buyer can get another cosigner or you can sell the car to pay off the loan.

The quick answer is yes, but it's not as easy as you might think. "Lenders are generally averse to removing a co-signer," says Dean Kaplan, president of The Kaplan Group, a commercial debt collection agency. That's because by removing your name from the loan, the lender's risk goes up.

A co-signer may be used to help a primary applicant receive more favorable loan terms. However, they are generally not given access to the funds or associated with the collateral involved. Thus, a co-signer only serves as a secondary source of payment in support of the borrower.

Lenders may require a cosigner if the borrower has bad credit, a limited employment history, or a high debt balance. As the cosigner, you'll usually remain on the loan until it's paid in full or until the borrower can refinance and qualify without a cosigner.

Being a co-signer doesn't give you rights to the property, car or other security that the loan is paying for. You are the financial guarantor, meaning you must make sure the loan gets paid if the primary borrower fails to do so.

Removing a cosigner or co-borrower from a mortgage almost always requires paying off the loan in full or refinancing by getting a new loan in your own name. Under rare circ*mstances, though, the lender may allow you to take over an existing mortgage from your other signer.