Can You Remove a Cosigner From a Car Loan in Canada?

Can You Remove a Cosigner From a Car Loan in Canada?

Posted on August 30, 2022

A cosigner can be an invaluable resource to help you get a better interest rate on an auto loan. But what happens if things change or your relationship changes with the cosigner? Can you remove a cosigner from a car loan?

We asked our Campbellville auto loans team whether you can remove a cosigner and how you would go about it.

Cosigners and Campbellville auto loans

A cosigner guarantees the auto loan to reassure the lender that it will be paid off regardless of whether you personally default or not. If you’re a borderline case for the loan or want to access lower rates, using a cosigner is an excellent way to get a cheaper loan.

Their credit score is added to yours and their financial situation is assessed alongside yours to ensure you could both pay off the loan if you had to.

Should a situation ever arise where you wanted to remove your cosigner from the loan, you do have options. Some are more practical than others, but all can get the job done.

Remove a Cosigner from a Car Loan

If, for any reason, you want to remove the cosigner from the loan, it may be possible. Much will depend on the lender and your situation at the time.

If your credit score and financial position is enough to keep the loan, you have a couple of options:

Request the removal with the lender

Some auto loans will have the facility to remove the cosigner. You’ll need to contact the lender and discuss the situation with them for this to work though. Some lenders will work with you while others won’t.

Refinance the loan

If the lender doesn’t agree to remove the cosigner, you can refinance the loan without the cosigner. You will need a good enough credit score to qualify and be in a position to repay what you borrow though.

All things being equal, this is a viable option if you cannot remove them from the loan by other means.

Pay off the loan

If you’re in the fortunate position of being able to pay off the loan in full, that’s a simple way to remove a cosigner. While we appreciate not many people have that kind of money lying around, it is a method of removing the cosigner, so we have to mention it.

If you don’t have the cash, you could sell the car and use the equity to settle the loan. While this will leave you without a car, if the situation demands it, this is also an option.

You could sell your old car to a dealership if you needed to move quickly.

Each of these methods are relatively straightforward but may incur expense. Refinancing is probably the most accessible but won’t suit everyone, in every situation.

We will use all our skill and experience to deliver the lowest possible Campbellville auto loan rates, guaranteed. Contact Car Nation Canada Direct to learn how we can help.

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