Co-signing as opposed to. co-owning a car What’s the difference? Advertiser Disclosure Advertiser Disclosure We are an independent, advertising-supported comparison service. Our mission is to help you make better financial decisions by providing you with interactive financial calculators and tools, publishing original and objective content, by enabling users to conduct research and compare data for free and help you make informed financial decisions. 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 website are provided by companies who pay us. This compensation can affect the way and where products appear on this site, including such things as the order in which they may appear within the listing categories and other categories, unless prohibited by law for our mortgage, home equity and other home loan products. However, this compensation will affect the information we publish, or the reviews you read on this site. We do not cover the entire universe of businesses or financial deals that could be accessible to you. FG Trade/Getty Images

2 minutes read. Published October 28, 2022

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Written by Bankrate Written by The article was created with the help of automation technology, and then verified and edited by an editor from our editorial team. Edited by Rhys Subitch Edited by Auto loans editor Rhys has been editing and writing for Bankrate since the end of 2021. They are committed to helping readers gain the confidence to control their finances through providing precise, well-researched, and well-documented facts that break down complex topics into manageable bites. Reviewed by Mark Kantrowtiz Reviewed by Nationally well-known expert on student financial aid Mark Kantrowitz is an expert on student financial aid as well as the FAFSA, 529 plans, scholarships, educational tax benefits, along with student loans. The Bankrate promise

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We are compensated in exchange for the placement of sponsored products and services or by you clicking on certain links posted on our site. This compensation could impact how, where and in what order products are listed and categories, unless it is prohibited by law. We also offer mortgage home equity, mortgage and other home lending products. Other factors, like our own proprietary website rules and whether the product is available in your area or at your self-selected credit score range may also influence the manner in which products are featured on this site. We strive to provide a wide range offers, Bankrate does not include details about every financial or credit products or services. Co-signing and co-owning a car are two different approaches to applying for co-signing with a second borrower. In both cases, the secondary borrower needs to have a good credit score and income to be able to fund the loan independently. But each has benefits and drawbacks, based on what both parties are looking for. The distinctions between a co-signing or co-owning of car. A co-signer someone who is responsible for paying off the loan however, they don’t have any legal ownership of the car. Co-owners have equal rights towards it. Co-signing for a car loan If it’s a car co-signer, they agree to make monthly repayments if the borrower is unable to make the payments. This is a big decision that must be made and it will . Benefits of cosigning on a car loan Aid in getting a loan: A co-signer may be eligible get an auto loan that they would otherwise not be eligible for. Credit building: In the event that the borrower can keep up with payments, the credit of co-signers as well as the co-signer can be positively affected. Reduce cost: If the co-signer is a good to excellent credit score the primary borrower will be eligible for a lower cost of interest and charges. The risks of co-signing an auto loan Responsibility for payments In the event that the borrower is in default the co-signer will be responsible accountable for the entire loan repayments. Legally insolvent The co-signer isn’t listed on the title and does not have any legal right to the car. Co-owning a car In the instance of a car both the owner and the 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 is the owner of the property. Based on the way in which the vehicle is named and the primary borrower might need permission before they can sell the vehicle. Benefits of co-owning a vehicle Security for the co-owners: The co-borrower has the protection that their names are on the title. Greater terms: If the two of the borrowers have strong credit, the primary borrower may get more favorable terms than if they had applied independently. There are risks associated with co-owning a car. Equal Rights: Each co-borrower has the same rights to the vehicle as the primary borrower. The co-owner is required to take part in transfer or sale of the vehicle. Insurance If the co-owner does not utilize the vehicle the car, they’ll likely have to be covered by the insurance policy. This could mean more expensive costs for the two parties concerned. 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 risk of the loan. Co-borrowers have more responsibility and ownership than co-signers. Co-borrowing is ideal for those who have good credit and want equal rights to the vehicle -like couples who want to buy a car together. However, it is not recommended it is a good option for someone who wouldn’t qualify for the loan even if they is in need of assistance to qualify for a larger amount or low interest. How to prepare to co-sign or co-own a vehicle To be a co-signer for an loan it is necessary to be able to prove a steady income and be able to meet the criteria for credit score that is set to be met by the lender. This is the same for being a co-owner, because the credit score of both borrowers is being taken into consideration. Even if you satisfy the requirements, an open conversation should be had between the two parties. Co-signing or co-owning each comes with significant credit risk. You must ensure that there is an insurance plan to cover the case that the primary borrower can’t pay. The bottom line There are many reasons you might want to co-sign or purchase a car with another person. In any case it is essential to ensure that the two parties on the same page about the nature of their relationship and what is expected from each of you. Find out more

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

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Review by Mark Kantrowtiz by Nationally acknowledged Student Financial Aid expert Mark Kantrowitz is an expert on student financial aid, the FAFSA as well as scholarships, 529 plans educational tax benefits, along with student loans.

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