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Co-signing vs. co-ownership of a vehicle: Which is better? Advertiser Disclosure Advertiser Disclosure We are an independent, advertising-supported comparison service. Our goal is to help you make better financial choices by providing you with interactive financial calculators and tools as well as publishing objective and original content. We also allow users to conduct research and compare information for free – so that you can make financial decisions with confidence. Bankrate has partnerships with issuers including, but not limited to, American Express, Bank of America, Capital One, Chase, Citi and Discover. How We Make money The products that are advertised on this site come from companies who pay us. This compensation may impact how and when products are featured on the site, such as such things as the order in which they may appear in the listing categories in the event that they are not permitted by law. Our mortgage, home equity and other products for home loans. This compensation, however, does not influence the information we provide, or the reviews you see on this site. We do not cover the universe of companies or financial offerings that might be accessible to you. FG Trade/Getty Images

2 min 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 team. The article was edited by Rhys Subitch Edited by Auto loans editor Rhys has been editing and writing for Bankrate since late 2021. They are dedicated to helping their readers feel confident to control their finances through providing clear, well-researched information that is broken down into complex topics into manageable bites. Review by Mark Kantrowtiz by Nationally acknowledged expert on student financial aid Mark Kantrowitz is an expert on financial aid for students including the FAFSA as well as 529 plans, scholarships, educational tax benefits, and student loans. The Bankrate promise

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We are compensated for placement of sponsored products and services, or by you clicking on specific links on our site. This compensation could affect the way, location and when products are listed, except where prohibited by law for our mortgage or home equity products, as well as other products for home loans. Other factors, such as our own rules for our website and whether a product is available within your region or within your own personal credit score may also influence the manner in which products are featured on this website. Although we try to offer the most diverse selection of products, Bankrate does not include details about every credit or financial product or service. Co-signing for a car and co-owning it are two approaches to applying for co-signing with a second borrower. In both cases the second borrower must to have sufficient credit and earnings to pay for their loan independently. Each has advantages and drawbacks, dependent on what the parties are looking for. The distinctions between a co-signing and co-owning vehicle. A co-signer is an individual who is responsible for repaying the loan but does not own any legal rights to the car. Co-owners share the same rights to the vehicle. Co-signing on the purchase of a car loan If it’s an automobile, the co-signer agrees to pay the monthly repayments if the borrower can’t make them. This is a major decision to make and will . Benefits of co-signing an auto loan Assistance in to qualify: A co-signer is eligible get a car loan they otherwise wouldn’t be eligible for. Credit building: In the event that the borrower can 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, the primary borrower can be eligible for a lower interest rate and fees. The risks of co-signing a car loan The responsibility for repayments In the event that the borrower is in default on a loan, the co-signer has the responsibility in charge of the entire loan payments. Legally insolvent The co-signer isn’t listed on the title and does not have any legal right to the vehicle. Co-owning a car In the case of a vehicle, both the owner and the co-owners are listed as co-owners on the title. Co-ownership doesn’t alter what is already clear that the principal borrower has the title to the property. Depending on how the car is registered or registered, the primary borrower could require permission to sell the vehicle. Benefits of co-owning a vehicle Security for the co-owners: The co-borrower has the safety that their names are listed on the title. Greater terms: If the two of the borrowers have good credit the primary borrower could be extended better conditions than if they were applying independently. Risks of co-owning a car Equal rights: The co-borrower is granted the same rights to the vehicle as the primary borrower. This means the co-owner must participate in either the transfer or sale of the car. Insurance If the co-owner does not make use of the vehicle the car, they’ll likely have to be covered by the insurance policy. This could mean more expensive costs for both involved. How to choose between co-signing and owning an automobile The most significant distinction between co-borrowers and co-signers is the level of investment in the loan. Co-borrowers take on more responsibility and ownership than co-signers. Co-borrowing is a good option for people with good credit and want equal rights to the vehiclefor example, couples who want to buy a car together. However, it is not recommended it is a good option for someone who isn’t eligible for the loan at all, or is in need of assistance to qualify for an amount that is larger or with a low interest. How do you prepare to co-sign or co-own a car . To become a co-signer on an loan it is necessary to have a stable income and meet the criteria for credit score set by the lender. The same is required for being a co-owner, because the credit of both the borrowers will be assessed. Even if you satisfy the requirements, a candid discussion should be held between the two parties. Co-signing and co-owning both come with substantial credit risk. Make sure there is an arrangement in place in case the primary borrower can’t pay. The bottom line There are many reasons you may choose to co-sign a car with another person. In any event it is essential for both of you to be in agreement about what the relationship entails and what expectations are expected of each of you. Learn more

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Written by The article was created using automated technology and was thoroughly checked for accuracy and quality by an editor on our editorial staff. The article was edited by Rhys Subitch Editor: Auto loans Editor Rhys has been editing and writing for Bankrate since late 2021. They are passionate about helping readers gain the confidence to take control of their finances by providing clear, well-researched details that cut otherwise complicated subjects into bite-sized pieces.

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Reviewed by Mark K. Kantrowitz Reviewed by Nationally known student financial aid expert Mark Kantrowitz is an expert on student financial aid and the FAFSA, 529 plans, scholarships educational tax benefits, and student loans.

Nationally anerkannt student financial aid expert

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