Sometimes, you may want to sign up for an auto loan, but your qualifications and income may not meet the lender’s requirements. What do you do in this case? Can you still apply for the auto loan? Can you share your loan with someone? Well, if you find yourself wondering, “Can I add or remove a co-borrower to my auto loan?” we have created a quick guide for you below to discuss whether it’s possible and how you can do it. So read on!
Can I Add or Remove a Co-Borrower to My Auto Loan?
You can add a co-borrower when you are not able to meet your lender’s requirements easily and can also remove them any time you want. A co-borrower, also known as a co-applicant, is a person who applies for an auto loan with you. The reason why people sign up for auto loans with a co-borrower is so that it can help them meet the lender’s requirements. During this process, the income of the applicant is also combined with that of the co-borrower. However, this is usually only done when the co-borrower is your spouse.
Adding a Co-Borrower to Your Auto Loan
Adding a co-borrower to your loan terms can get you a better car, loan terms, and interest rates. Here’s what you will need to qualify for an auto loan with a co-borrower:
- You should meet the lender’s requirements for income, the debt to income ratio, and the payment to income ratio. However, if your co-borrower is your spouse, you can combine your income and meet these requirements together.
- You should show them a current utility bill or a bank statement with your residential address that is listed on the application.
- You should show them a current bill or contract for a cellphone or a landline phone for both the applicants. Prepaid phones are not usually accepted.
- You should give them a list of 5-8 personal references with their names, contact numbers, email addresses, and residential addresses listed.
Removing a Co-Borrower from Your Auto Loan
If your co-borrower wants to exit an auto loan and is not able to meet the extra financial responsibility, you can remove them from your auto loan. To remove a co-borrower, you will need to refinance your loan and take out an entirely new loan. You can also get a co-signer released by contacting your lender and requesting them for a release. This involves removing the co-borrower from the paperwork. Or, you can pay off your loan completely to rid the responsibility for both the borrowers.
Now that we have answered your question, “can I add or remove a co-borrower to my auto loan?” we hope you can easily determine how the process works and how you can take care of it.