How to Make a Cosigner the Primary on a Car Loan

Sometimes, the primary borrower on a car loan can’t keep up with the payments, or perhaps there’s been a relationship change that affects the loan. In these situations, it’s normal to ask, “Can a cosigner take over an auto loan?” 

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Usually, a cosigner can’t automatically become the primary borrower. The cosigner’s role is simply to make the payments when the primary borrower can’t (or won’t). However, it may be possible to change the loan to make the cosigner the primary through auto loan refinancing or a loan transfer with the lender’s approval. Learn more about the roles of each person in a car loan and the process to change them.

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Key takeaways

• A cosigner can’t take over a car loan from the primary borrower.
• The most common path if you want to “trade roles” is to refinance the car loan into the cosigner’s name only.
• Refinancing to make the cosigner into the primary borrower also involves transferring ownership and title to the new primary borrower.
• Refinancing and changing the primary borrower can have an effect on the credit score of both parties.
• To start the process of making a cosigner into a primary borrower, use RefiJet to quickly compare auto refinance offers from trusted lenders. 

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Difference between a primary borrower and cosigner

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First, it’s important to be clear about the difference between a primary borrower and a cosigner. The primary borrower is the person who is legally responsible for repaying the car loan. It’s their loan and their vehicle. The primary borrower is usually the owner of the car. 

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In contrast, the cosigner is someone who adds their name to the loan, often to help the primary borrower qualify. The cosigner agrees to be liable for the loan if the primary borrower does not make the required payments. However, being a cosigner does not grant you any ownership of the car. 

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Can a cosigner take over an auto loan?

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A car loan is a legal contract spelling out the responsibilities of each party. Therefore, the cosigner can’t just take over the loan, as that’s not their role.

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So how can a cosigner become the primary on a car loan? Typically, it requires refinancing. The cosigner refinances the car loan into their name and take it over that way. This is an option if the primary borrower can’t (or doesn’t want to) continue making payments. 

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Refinancing cosigned auto loans creates an all-new loan, not a transfer of responsibility from the primary borrower to the cosigner. 

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Refinancing to become a primary borrower

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In order to refinance as the primary borrower, the person currently acting as cosigner will need to complete a new loan application on their own. Here’s how refinancing without a cosigner works.

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• Make sure you meet requirements: A new loan will require the applicant to meet credit score and income requirements. Check your credit score to be sure it’s still in good shape and make sure you have pay stubs handy to prove your income.
• Find out the payoff amount: Your new loan will pay off the current loan, so you’ll need to know the payoff amount. Contact the lender to find out this amount and check whether there are any early payoff fees.
• Shop for a lender: You can ask if your current lender will process a refinance, and shop around for rate quotes from other lenders to compare.
• Apply: The cosigner fills out the new loan application as the sole borrower. The lender will usually do a hard credit inquiry and evaluate your income and other debts to make their decision.
• Transfer title: If the application is approved, you’ll sign the paperwork, pay off the old loan, and file paperwork with your local Department of Motor Vehicles to register the car in your name, with the new lender as lienholder.

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What to know before switching roles

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When you’re considering whether to refinance as the primary borrower, there are some things to think about.

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First, the ownership of the car will change. Cosigners are not usually named on the title; becoming the primary borrower means you’ll become the owner of the vehicle, too. That will affect your car insurance and will typically require paying new registration and title fees. 

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Secondly, refinancing can affect credit for both the original primary borrower and the cosigner. The original loan will end, which could impact the credit score of the original primary borrower when it changes their credit mix. 

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Finally, the payment for the new primary borrower could change. Since they’ll need to apply for a new loan with different terms, they may qualify for a different interest rate. A higher rate or different loan terms could mean a higher or lower payment.

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Ways to end a cosigned car loan

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If your main goal is to remove or replace a borrower, refinancing is the most common path, but it’s not the only one. 

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Refinancing lets you adjust ownership, potentially lower your rate, and change who is responsible for the loan. However, there are alternatives that may suit your circumstances better.

• Pay off the loan: Paying off the loan in full removes the need for a borrower to make payments at all. It could be an option for someone with savings or if they’ve received a windfall of some kind. Check whether your lender assesses early payoff penalties if you go this route.
• Sell the car: Another option is to sell the car, using the proceeds from the sale to satisfy the loan. You won’t have any more payments, but you won’t have a vehicle, either.
• Surrender the car: With this option, you return the car to the lender because you can’t make the payments. It’s also called a voluntary repossession, and it can negatively affect your credit. You may also be responsible for additional fees, as well as paying the difference between the remaining balance of the car loan and the amount the lender can get for the car.

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Compare refinancing offers

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Sometimes a car loan situation no longer works for the primary borrower and their cosigner. A cosigner can become the primary on a car loan only through refinancing.  

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Refinancing is a common method of removing a cosigner from a car loan because it replaces the existing loan with a new one. Always compare refinancing offers to make sure you get the best rate and terms for your needs, and make sure both the primary borrower and the cosigner understand the potential financial impact. RefiJet offers fast, easy refinancing so you can get the loan that works best for you.

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FAQs

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Here are some common questions about how to make a cosigner into a primary borrower for a car loan.

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What's the difference between a primary borrower and a cosigner?

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The primary borrower is the one responsible for the car and the loan payments. The cosigner is responsible for payments if the primary borrower fails to make them, but the cosigner doesn’t own the car.

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Can a cosigner take full ownership of a car?

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A cosigner cannot take full ownership of a car without making changes to the loan agreement and title first. A common path is to refinance the vehicle into their name and transfer the title from the original borrower.

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Can a cosigner remove themselves from a car loan?

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It’s not always easy for a cosigner to be released from a car loan. You’ll either need to get approval from the lender or refinance the loan to release the cosigner.

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Will switching roles affect credit scores for either party?

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Yes, changing the car loan can affect your credit scores. Removing someone from the loan will affect their credit mix and age of credit, which can cause a small dip to their score. However, without that additional debt, their credit score may improve with time. For primary borrowers, it’s possible that a new loan could improve their score, especially if the former borrower missed payments or made late payments. 

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Can a cosigner remove the original borrower from the loan?

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No. The original borrower is the main applicant and owner, so the cosigner cannot change the terms of the loan. 

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Are there risks in transferring a car loan to the cosigner?

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There are some risks, yes. For example, as the new primary borrower, they now have sole responsibility for the loan. Transferring ownership can incur new costs, including maintenance and insurance costs. And if interest rates have changed since the loan was originally taken out, your monthly payment could change, too.

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