Cosigner Release: Removing Yourself from a Loan (2024)

FAQs

What happens if I remove myself as a cosigner? ›

When you're released as the cosigner, you're no longer legally liable for repayment. In addition, you don't have to worry about the potential damage to your credit if your son falls behind on payments, and you're less likely to be denied future loans based on the amount of debt owed on the student loan.

Refinance or Consolidate

You'll be off the hook, and they may secure more favorable loan terms," says Tayne. Similarly, your co-borrower can also look into getting a consolidation loan, which combines all existing debts into one new loan, thus removing you as a co-signer.

To get a co-signer release you will first need to contact your lender. After contacting them, you can request the release — if the lender offers it. This is just paperwork that removes the co-signer from the loan and places you, the primary borrower, as the sole borrower on the loan.

You can easily find out if your loan has a cosigner release option by contacting your lender. Sell the car: If you sell your car to someone else and use the money you get to pay off the rest of the loan in full, you'll release both yourself and the cosigner from your payment obligations.

Cosigner release is the process of having a cosigner removed from an existing loan, which means the cosigner is no longer responsible for the loan. If a borrower can prove to the lender they're financially stable on their own, they might qualify for cosigner release.

Co-signers can potentially be removed from the loan

Depending on the lender, the borrower may be able to release you from the loan using a form called a co-signer release.

You can't remove yourself from a loan contract just because the other borrower isn't holding up their end. Your responsibility doesn't end until the contract is fulfilled and the loan is repaid.

If the borrower has the ability to pay and simply won't do so, you may want to consider legal action. You can file an action in small claims court (in some states such as Georgia this is the Magistrate's Court) to recover any amount you have to pay on the borrower's debt, plus court costs.

Get a loan release

Check with your lender to figure out the requirements for qualifying for a co-signer release. The CFPB offers some sample letters a co-signer can send to request a release. Some lenders, however, only allow the original borrower to apply for a co-signer release.

Can you remove someone from a loan without refinancing? ›

Bottom Line. While refinancing is the most straightforward and obvious way to remove a person from a mortgage, that option isn't always available or optimal. Doing so without refinancing is possible via mortgage assumption, loan modification or even bankruptcy.

Plan ahead to protect your credit

Ask the primary borrower if they can afford the monthly payment. If not, make a plan together. Monitor loan payments. Whether or not you're aware of the status of the loan, missed payments can hurt your credit.

You need the LANDLORD's consent FIRST. Only the landlord can take you off the lease and relieve you of your financial responsibility. So talk to the landlord FIRST.

So, if the primary cardholder made consistent on-time payments, removing yourself could actually lower your credit score. If, on the other hand, that account has several missed or late payments, removing yourself from the loan could help repair your credit.

Having a co-signer on the loan will help the primary borrower build their credit score (as long as they continue to make on-time payments). It could also help the co-signer build their credit score and credit history, if the primary borrower makes on-time payments throughout the course of the loan.