Co-signing as opposed to. co-owning a vehicle: Which is better? 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 as well as publishing objective and original content. We also allow users to conduct research and compare data for free and help you make informed financial decisions. Bankrate has partnerships with issuers, including but not restricted to, American Express, Bank of America, Capital One, Chase, Citi and Discover. How We Make money The products that appear on this site are from companies that compensate us. This compensation can affect the way and when products are featured on this website, for example such things as the order in which they may be listed within the categories of listing, except where prohibited by law. Our loans, mortgages,, and other home lending products. This compensation, however, does affect the information we provide, or the reviews you see on this site. We do not cover the vast array of companies or financial offers that may be available to you. FG Trade/Getty Images

2 min read published 28 October 2022

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Written by Bankrate The article was created using automation technology and thoroughly checked and edited by an editor on our editorial team. Written 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 to manage their finances by providing clear, well-researched information that breaks down complicated topics into digestible pieces. Reviewed by Mark Kantrowtiz Reviewed by Nationally recognized expert in student financial aid Mark Kantrowitz is an expert on financial aid for students, the FAFSA as well as 529 plans, scholarships education tax benefits , and student loans. The Bankrate promise

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We are compensated in exchange for placement of sponsored products and services, or through you clicking certain links posted on our site. This compensation could influence the manner, place and when products appear within listing categories in the event that they are not permitted by law. We also offer mortgage or home equity products, as well as other home lending products. Other elements, such as our own rules for our website and whether the product is available within the area you reside in or is within your own personal credit score may also influence how and where products appear on this website. Although we try to offer the most diverse selection of products, Bankrate does not include details about each credit or financial product or service. Co-signing and co-owning a car are two approaches to applying for the loan with another borrower. In both situations the second borrower has to have a good credit score and earnings to pay for their loan by themselves. But each has benefits and drawbacks, depending on what the parties want. There are differences between co-signing or co-owning of a car A co-signer is someone who is accountable for the repayment of the loan however, they don’t own any legal rights to the car. Co-owners have equal rights towards it. Co-signing on the purchase of a car loan If it’s an automobile co-signer, they agree to take on the monthly installments in the event that the borrower isn’t able to pay the payments. This is a big decision to make and will . Benefits of co-signing on a car loan Help getting a loan: A co-signer may be eligible get the car loan they otherwise wouldn’t be eligible for. Build credit: In the event that the borrower is able keep up with payments, the credit of both the primary borrower as well as the co-signer can be positively affected. Reduce costs: If the co-signer has a very good to excellent credit score and the primary borrower is in good standing, they can qualify for a lower fee and interest rate. The risks of co-signing the car loan the responsibility for payment In the event that the borrower is in default, the co-signer is for the totality of loan repayments. No legal claim Co-signer: The co-signer isn’t listed on the title and has no legal rights to the car. Co-ownership of a vehicle In the instance of a car both the owner and the co-owner are listed in the document. The fact that a co-owner is listed doesn’t change the fact that the primary borrower has the title to the property. Depending on how the car is titled or registered, the primary borrower could need permission before they can sell the vehicle. Benefits of owning a car with a co-owner Safety for co-owner Co-borrowers have the safety of their name being on the title. Greater terms: If the two of the borrowers have good credit the primary borrower could get more favorable terms than if they had applied on their own. There are risks associated with co-owning a car. Equal Rights: Each co-borrower is granted the same rights to the vehicle as the principal borrower. The co-owner is required to take part in transfer of the car. Insurance: Even if the co-owner doesn’t actually use the car, they will likely need to be on the policy of insurance. This can mean higher costs 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 in the loan. Co-borrowers have more responsibility and responsibility than co-signers. Co-borrowing is ideal for those who have excellent credit scores and wish to have equal rights to the vehicle — such as an engaged couple who wish to purchase a car together. However, it is not recommended it is a good option for someone who isn’t eligible for the loan even if they needs help qualifying for an amount that is larger or with a lower interest rate. How do you prepare yourself to co-sign or co-own an automobile To become a co-signer on a loan it is necessary to have a steady income and meet the credit score requirement that is set to be met by the lender. The same is required for being a co-owner because the credit score of both borrowers is being considered. Even if you satisfy the requirements, a candid dialogue should be conducted between the two parties. Co-signing and co-owning both come with significant credit risk. Be sure to have an insurance plan in case the primary borrower can’t pay. The bottom line There are many reasons why you may choose to co-sign or purchase a car with another person. In any event, it is important to ensure that the two parties on the same page about what the relationship entails and what’s expected of both of you. Learn more


Written by The article was produced using automation technology, and was thoroughly checked for accuracy and quality by an editor on our editorial staff. Edited by Rhys Subitch Edited by Auto loans editor Rhys has been editing and writing for Bankrate since late 2021. They are passionate about helping readers gain confidence to manage their finances through providing clear, well-researched information that breaks down otherwise complicated topics into digestible pieces.

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

Nationally acknowledged expert in student financial aid

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