Co-signing vs. co-owning a car How do you tell the differences? Advertiser Disclosure Advertiser Disclosure We are an independent, advertising-supported comparison service. Our aim is to assist you make better financial choices by offering interactive financial calculators and tools that provide objective and unique content. We also allow users to conduct research and compare information for free and help you make financial decisions with confidence. Bankrate has agreements with issuers including, but not limited to American Express, Bank of America, Capital One, Chase, Citi and Discover. How We Make Money The deals that are displayed on this site are from companies that pay us. This compensation may impact how and when products are featured on this website, for example, for example, the sequence in which they appear in the listing categories in the event that they are not permitted by law. Our mortgage, home equity and other home lending products. But this compensation does affect the content we publish or the reviews that appear on this website. We do not cover the entire universe of businesses or financial offers that may be available to you. FG Trade/Getty Images
2 minutes read. Published October 28, 2022
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Written by Bankrate Bankrate. This article was written with the help of automation technology, and then checked and edited by an editor from our editorial staff. Written by Rhys Subitch Edited by Auto loans editor Rhys has been writing and editing for Bankrate since late 2021. They are dedicated to helping their readers gain the confidence to control their finances. They provide precise, well-studied information that breaks down complicated topics into digestible pieces. Review by Mark Kantrowtiz by Nationally well-known student financial aid expert Mark Kantrowitz is an expert on financial aid for students as well as the FAFSA, scholarships, 529 plans, educational tax benefits, as well as student loans. The Bankrate guarantee
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Each has advantages and drawbacks, depending on the kind of thing both parties are looking for. There are differences between co-signing and co-owning a car A co-signer is someone who is responsible for repaying the loan but does not possess any legal title to the vehicle. A co-owner has equal claim towards it. Co-signing for an automobile loan in the case of a car co-signer, the co-signer is required to take on the monthly payments if the borrower can’t make them. This is a major choice to make and could be . Benefits of co-signing the car loan Assistance in to qualify: A co-signer is eligible get the car loan they otherwise wouldn’t be qualified for. Build credit: If the primary borrower is able to stay on top of payment, the credit of each primary lender and co-signer may be improved. Reduce costs: If the co-signer has a very good to excellent credit score and the primary borrower is in good standing, they can qualify for a lower fee and interest rate. There are risks associated with co-signing on a car loan The responsibility for repayments: If the borrower defaults, the co-signer is in charge of the totality of loan payments. There is no legal claim co-signer does not appear listed on the title and does not have any legal right to the car. Co-ownership of a vehicle is a legal option. In the case of a car, both the owner and the co-owner are listed in the document. Co-ownership doesn’t alter the fact that the primary borrower is the owner of the property. Based on the way in which the vehicle is named and the primary borrower might require permission to sell the vehicle. Benefits of co-owning a car Safety for co-owner: The co-borrower has the security of their name being on the title. Better terms: If both of the borrowers have credit that is strong, the primary borrower may be extended better terms than if they applied on their own. The risks of co-owning a vehicle Equal Rights: Each co-borrower is granted the same rights to the vehicle as the primary borrower. This means that the co-owner has to be involved in the transfer or sale of the vehicle. Insurance If the co-owner does not use the car, they will likely be required to sign an insurance plan. This means higher cost for everyone concerned. How to choose between co-signing or co-owning an automobile The most significant distinction between co-signers and co-borrowers is the amount of money invested in the loan. Co-borrowers take on more responsibility and control over the loan than cosigners. Co-borrowing is a good option for those who have good credit and want to share equal rights to the vehicle- such as couples who want to buy a car together. On the other hand, a for a borrower who isn’t eligible for the loan at all, or is in need of assistance to qualify for more money or a low interest. How do you prepare to co-sign or co-own a car To be co-signer on a loan it is necessary to have a stable income and be able to meet the criteria for credit score that is set by the lender. This is the same for being a co-owner because the credit of both people who are borrowing is taken into consideration. If you do meet the requirements, a candid dialogue should be conducted between both parties. Co-signing and co-owning both come with significant credit risk. Make sure there is an insurance plan to cover the case that the primary borrower can’t pay. The bottom line There are many reasons you may choose to co-sign or co-own an automobile with a different person. In any case, it is important to ensure that the two parties in agreement about what their relationship is about and what expectations are expected of both of you. Learn more
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The article was written by created using automated technology and was thoroughly checked for accuracy and quality by an editor on our editorial team. The article was edited by Rhys Subitch Edited by Auto loans editor Rhys has been editing and writing for Bankrate from late 2021. They are passionate about helping readers gain confidence to manage their finances by providing concise, well-studied information that breaks down otherwise complex topics into manageable bites.
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Reviewed by Mark Kantrowtiz Reviewed by Nationally known student expert in financial aid Mark Kantrowitz is an expert on financial aid for students, the FAFSA as well as scholarships, 529 plans educational tax benefits, along with student loans.
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