How to Remove Cosigner from Car Title After Payoff

Paying off your car is exciting, but if you had a cosigner on the loan documents and put the co-owner on the title, you don’t own the car alone. Now that your car is paid in full, you likely want to be able to do what you want, which may require you to remove the cosigner from the car title.

Here are the steps you must take.

How to Remove Cosigner From Car Title After Payoff

Whether you want to sell the car whenever you want or use it as collateral on a title loan, not having another person on the title makes it a lot easier. Here’s how to release a cosigner:

1. Gather Necessary Documentation

To release a cosigner from the car title, you’ll essentially do a title transfer from both owners to only your name. This step requires a few documents, including the original title signed by the ‘sellers,’ odometer verification, a valid government-issued ID, and proof of insurance. The required documents may vary by state, so check with your state’s DMV to be sure you have everything.

2. Get Consent

If there are more than two owners on the title, you may need the consent of all parties to do the title transfer. Whether this is necessary depends on whether the title says ‘and’ or ‘or’ between names. If it says ‘or’ or ‘and/or,’ you only need one person’s consent to transfer it. But if the title has ‘and’ between the names, you must have the signatures of all parties.

3. Determine DMV Procedures

Every state’s Department of Motor Vehicles has different procedures for a title transfer. Check your state’s website to see what’s required. For example, you may be able to apply for the transfer online, or you may have to visit the DMV in person with all parties present. Knowing ahead of time what’s required can save you time and hassle.

4. Submit Paperwork

Whether you visit the DMV in person or apply online, you must submit paperwork to the appropriate office. Most states require that you complete a title transfer application, pay the appropriate fee, and provide any necessary documentation.

5. Receive New Title

You may receive the title when you apply or have to wait a few days or weeks to receive it by mail. Each state’s DMV has a different turnaround time.

What is a Cosigner?

There’s a big difference between a cosigner and a co-owner. Both help you secure financing to purchase or refinance a car, but a cosigner doesn’t own the vehicle like a co-owner.

A cosigner only provides their credentials to help you secure financing. For example, if you have a poor credit history, but your parents have a great one, they may cosign a new loan for you to buy a car.

They don’t have ownership rights of the vehicle. This means they are not on the vehicle title and cannot make any decisions regarding the car, including selling it or borrowing against its value with a title loan. Their only responsibility is to pay the auto loan payment if you default on your loan contract on your current auto loan.

The Benefits of a Cosigner

• You may get approved for a car loan if you can’t qualify on your own
• You may secure better loan terms with a cosigner with a good credit score
• Your credit score may increase with the new loan if you make timely payments

Risks of a Cosigner

• The cosigner is responsible for payments if you don’t make them
• Missed payments could decrease the cosigner’s credit score
• Not all lenders allow a cosigner release before a loan payoff

What is a Co-Owner?

A co-owner is like a cosigner, except they own the vehicle. Their name is on the vehicle title, not just the loan. Like cosigners, the co-owner could be responsible for the monthly payments if the borrower doesn’t pay them. However, unlike a cosigner, the co-owner has a say in what happens with the vehicle and typically must sign the title in a title transfer, so one owner cannot sell or borrow against the vehicle without the other knowing.

The Benefits of a Co-Owner

• The co-owner has legal protection should you default on the loan
• You may get better loan terms with a co-owner with good credit
• The co-owner may feel more secure knowing they own the vehicle

Risks of a Co-Owner

• You may not be able to do what you want with the car
• If you miss payments, it could hurt the co-owner’s credit

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What Happens After Loan Payoff?

If you satisfy the loan payoff, you own your car without liens. This means the lender removes themselves from the car title, and you own the vehicle title in your name. If you own the vehicle alone (no cosigner or co-owner), you can do what you want with the car.

For example, if you want to buy a new car, you may sell the existing car and use the proceeds to purchase another one. You can also keep the car and continue driving it like normal. Just ensure you receive the new title without the lender’s name on it and inform the DMV and your insurance company that you no longer have a lien on the car.

If you own the vehicle without any liens and need emergency funds, you may be able to borrow against the vehicle’s title using a title loan.

What is a Title Loan?

A title loan is a loan against the car’s value. Title lenders typically require that you own the vehicle without an existing loan so you can borrow from its value and leave some equity in the vehicle. Title loan lenders typically focus on the car’s value and whether you can repay the loan to qualify, so you typically don’t have to worry about a cosigner for this type of loan.

However, if you own the vehicle with another person, and the title has an ‘and’ between both names, both parties must sign for the title loan.

Many title loan companies fund title loans the same day if you apply and are approved before the cutoff. If not, you typically receive funds by the next business day. It’s a solid option for unexpected emergencies when you don’t have the funds.

FAQ

Final Thoughts

Removing a cosigner who you put on the title as a co-owner from the car’s title is important if you want to own the vehicle yourself. If the cosigner didn’t put any money into the vehicle, it should be easy to transfer the title into your name only. However, if the owner put any money into the vehicle, you may need to repay them before they will agree to a cosigner release.

If you own the vehicle without any liens or co-owners and need emergency funds, a title loan may be an option, or you can apply for a title loan with cosigners. You can determine your eligibility by completing a free, no-obligation loan application. You’ll receive an answer within minutes and can decide whether to accept the offer.