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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 smarter financial decisions by offering interactive tools and financial calculators that provide objective and unique content. We also allow you to conduct research and compare information for free to help you make financial decisions with confidence. Bankrate has agreements with issuers including, but not restricted to, American Express, Bank of America, Capital One, Chase, Citi and Discover. How We Make Money The offers that appear on this site are from companies that compensate us. This compensation may impact how and where products are displayed on this website, for example for instance, the order in which they may be listed within the categories of listing in the event that they are not permitted by law for our mortgage, home equity, and other home loan products. However, this compensation will not influence the information we provide, or the reviews you see on this site. We do not contain the universe of companies or financial offerings that might be available to you. FG Trade/Getty Images

2 min read Published October 28, 2022

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Written by Bankrate This article was generated using automation technology and thoroughly 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 end of 2021. They are dedicated to helping their readers to control their finances through providing clear, well-researched facts that break down complicated topics into digestible pieces. Review by Mark Kantrowtiz by Nationally acknowledged expert in student financial aid Mark Kantrowitz is an expert on student financial aid including the FAFSA, 529 plans, scholarships education tax benefits and student loans. The Bankrate promise

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Each has advantages and drawbacks, based on what the parties are looking for. The differences between a co-signing or co-owning of vehicle. A co-signer is someone who is responsible for repaying the loan but does not have any legal ownership of the vehicle. A co-owner has equal claim towards it. Co-signing on an automobile loan In the case of an automobile co-signer, they agree to make monthly repayments if the borrower isn’t able to pay the payments. It’s a huge choice to make and could be . Benefits of co-signing an auto loan Aid in to qualify: A co-signer is eligible for a car loan that they would otherwise not be qualified for. Improve credit score In the event that the borrower can remain on top of their payments, the credit score of co-signers as well as the co-signer could be impacted positively. Reduce cost: If the co-signer is a good to excellent credit score, the primary borrower can be eligible for a lower cost of interest and charges. There are risks associated with co-signing on a car loan the responsibility for payment In the event that the borrower is in default, the co-signer is in charge of all loan repayments. There is no legal claim: The co-signer is not in the title of the car and has no legal claim to the car. Co-ownership of a vehicle is a legal option. In the case of a vehicle, both the owner and co-owner are as co-owners on the title. The fact that a co-owner is listed doesn’t change any fact about the reality that the borrower who is the main one owns the property. Based on the way in which the vehicle is named or registered, the primary borrower could require permission to sell the car. Benefits of co-owning a vehicle Safety for co-owner A co-borrower is protected by the security of having their name on the title. Better terms: If both borrowers have good credit the primary borrower might receive more favorable conditions than if they were applying 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 the co-owner must take part in transfer of the car. Insurance If the co-owner does not use the car, they’ll likely be required to sign the insurance policy. This means higher cost for the two parties involved. How to choose between co-signing and co-owning an automobile The most significant difference between co-borrowers and co-signers is the amount of money invested of the loan. Co-borrowers are more accountable and have greater responsibility than co-signers. Co-borrowing is best for people with good credit and want to share equal rights to the vehicle- such as an engaged couple who wish to buy a car together. On the other hand, co-borrowing is for those who wouldn’t qualify for the loan at all, or is in need of assistance to qualify for more money or a lower interest rate. How do you prepare to co-sign or co-own the car. To be co-signer on an loan you must be able to prove a steady income and be able to meet the credit score requirement that is set to be met by the lender. Similar requirements apply to being a co-owner because the credit of both borrowers is being considered. If you do meet the requirements, an open discussion should be held between both parties. Co-signing and co-owning both carry substantial credit risk. Be sure to have a plan in place for the event that the borrower who is primary will not be able to pay. The bottom line There are many reasons why you may choose to co-sign an automobile with a different person. In any event it is crucial for both of you to be on the same page regarding the nature of their relationship and what’s expected of each of you. Learn more

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Written by This article was created using automated technology that was then thoroughly edited and checked by an editor on our editorial staff. Editor: Rhys Subitch Edited by Auto loans editor Rhys has been writing and editing for Bankrate from late 2021. They are enthusiastic about helping readers gain confidence to manage their finances through providing clear, well-researched information that is broken down into complex subjects into bite-sized pieces.

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Review by Mark Kantrowtiz by Nationally known student expert in financial aid Mark Kantrowitz is an expert on financial aid for students and the FAFSA, 529 plans, scholarships as well as tax benefits for education and student loans.

Nationally acknowledged expert in student financial aid

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