Co-signing or. co-owning a car What's the difference? Advertiser Disclosure Advertiser Disclosure We are an independent, advertising-supported comparison service. Our aim is to assist you make better financial choices by providing you with interactive tools and financial calculators that provide objective and unique content, by enabling users to conduct research and compare information for free - so that you can make financial decisions with confidence. Bankrate has agreements with issuers such as, but not limited to, American Express, Bank of America, Capital One, Chase, Citi and Discover. How We Make Money The offers that appear on this website are provided by companies that pay us. This compensation could affect how and where products appear on this site, including for instance, the sequence in which they be listed within the categories of listing in the event that they are not permitted by law. Our loans, mortgages, and other home lending products. However, this compensation will not influence the information we publish, or the reviews that appear on this website. We do not include the entire universe of businesses or financial offerings that might be open to you. FG Trade/Getty Images
2 min read published 28 October 2022
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Written by Bankrate This article was generated with the help of automation technology, and then verified and edited by an editor on our editorial staff. The article was edited by Rhys Subitch Edited by Auto loans editor Rhys has been editing and writing for Bankrate since the beginning of 2021. They are dedicated to helping their readers feel confident to take control of their finances through providing clear, well-researched facts that break down complex subjects into bite-sized pieces. Review by Mark Kantrowtiz by Nationally acknowledged student financial aid expert Mark Kantrowitz is an expert on financial aid for students including the FAFSA and 529 plans, scholarships, educational tax benefits, as well as student loans. The Bankrate promise
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Each has advantages and drawbacks, dependent on the kind of thing both parties are seeking. There are differences between co-signing and co-owning a car A co-signer is a person who is equally accountable for the repayment of the loan but does not own any legal rights to the car. A co-owner is entitled to the same rights to the vehicle. Co-signing on the purchase of a car loan If it's an automobile co-signer, they agree to pay the monthly payments if the borrower isn't able to pay the payments. It's a huge decision that must be made and it will . Benefits of co-signing on an auto loan Assistance in getting a loan: A co-signer may be eligible apply for a car loan which they wouldn't otherwise be eligible for. Build credit: When the principal borrower can stay on top of payments, the credit score of each primary lender as well as the co-signer can be positively affected. Reduce costs: If the cosigner is a good to good credit score then the primary borrower will get a better interest rate and fees. Risks of co-signing on an auto loan The responsibility for repayments If the borrower fails to pay on a loan, the co-signer has the responsibility in charge of the totality of loan payments. There is no legal claim Co-signer: The co-signer isn't on the title and does not have any legal right to the vehicle. Co-ownership of a car is a legal option. In the case of a vehicle, both the owner and co-owners are listed on the title. The fact that a co-owner is listed doesn't change the fact that the primary borrower owns the property. If the car is registered, the primary borrower may require approval before they are able to sell the vehicle. Benefits of co-owning a vehicle Security for the co-owners A co-borrower is protected by the protection of having their name listed on the title. Greater terms: If the two borrowers have good credit the primary borrower could get better conditions than if they were applying independently. The risks of co-owning a vehicle equal Rights: Each co-borrower is granted the same rights to the vehicle as the principal borrower. The co-owner is required to be involved in the transfer or sale of the vehicle. Insurance: Even if the co-owner does not use the vehicle, they will likely be required to sign an insurance plan. This can mean higher costs for everyone affected. How to choose between co-signing or co-owning an automobile The most significant difference between co-borrowers and co-signers is the level of investment in the loan. Co-borrowers are more accountable and have greater ownership than co-signers. Co-borrowing is a good option for those who have good credit and want to share equal rights to the car -like an engaged couple who wish to purchase a vehicle together. However, it is not recommended it is a good option for someone who doesn't meet the requirements for the loan even if they requires assistance in obtaining more money or a lower interest rates. How to prepare for co-signing or co-owning the car. To be co-signer on the loan, you'll need to have a stable income and meet the requirements for credit scores set to be met by the lender. Similar requirements apply to being a co-owner because the credit of both co-borrowers is considered. If you do meet the requirements, an open dialogue should be conducted between both parties. Co-signing or co-owning each comes with substantial credit risk. You must ensure that there is an insurance plan for the event that the primary borrower can't pay. The bottom line There are a variety of reasons why you could choose to co-sign or co-own the car with another individual. In any case it is crucial to ensure that the two parties on the same page about the nature of their relationship and what expectations are expected of each of you. Learn more
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Written by The article was produced using automation technology, and thoroughly edited and fact-checked by an editor from our editorial team. The article was edited by Rhys Subitch Edited by Auto loans editor Rhys has been writing and editing for Bankrate since late 2021. They are passionate about helping readers gain confidence to take control of their finances through providing concise, well-studied information that breaks down otherwise complex subjects into bite-sized pieces.
Auto loans editor
Review by Mark Kantrowtiz by Nationally acknowledged student expert in financial aid Mark Kantrowitz is an expert on student financial aid and the FAFSA as well as scholarships, 529 plans, education tax benefits and student loans.
Nationally anerkannt student financial aid expert
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