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Co-signing vs. co-owning a car 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 financial calculators and tools as well as publishing objective and original content. This allows users to conduct research and compare data for free and help you make financial decisions with confidence. Bankrate has agreements with issuers including, but not limited to American Express, Bank of America, Capital One, Chase, Citi and Discover. How We Earn money The products that appear on this site are from companies that pay us. This compensation can affect the way and where products appear on this website, for example, for example, the sequence in which they appear within the listing categories in the event that they are not permitted by law. This applies to our mortgage, home equity and other products for home loans. However, this compensation will not influence the information we provide, or the reviews appear on this website. We do not include the entire universe of businesses or financial offerings that might be open to you. FG Trade/Getty Images

2 minutes read. Published 28 October 2022

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Written by Bankrate This article was generated by using automated technology. It was then thoroughly verified and edited by an editor from our editorial staff. Edited 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 concise, well-researched and clear information that breaks down otherwise complex subjects into bite-sized pieces. Written by Mark Kantrowtiz and reviewed by Nationally acknowledged expert in student financial aid Mark Kantrowitz is an expert on financial aid for students, the FAFSA and scholarships, 529 plans, educational tax benefits, as well as student loans. The Bankrate guarantee

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Therefore, this compensation may impact how, where and in what order items are listed and categories, unless it is prohibited by law. We also offer mortgage home equity, mortgage and other home lending products. Other elements, such as our own website rules and whether or not a product is available in your region or within your personal credit score may also influence how and where products appear on this site. Although we try to offer the most diverse selection of products, Bankrate does not include information about each credit or financial item or product. Co-signing and co-owning cars are two ways to approach applying for the loan with another borrower. In both cases the second borrower has to have sufficient credit and earnings to pay for their loan on their own. Each has advantages and drawbacks, dependent on what both parties are seeking. The differences between a co-signing and a co-owning car. A co-signer a person who is equally accountable for the repayment of the loan but does not have any legal ownership of the car. Co-owners have equal rights to it. Co-signing on an automobile loan In the case of an automobile co-signer, the co-signer is required to take on the monthly payments if the borrower isn’t able to pay the payments. It’s a huge decision to make and will . Benefits of co-signing an auto loan Help getting a loan: A co-signer may be eligible get a car loan they otherwise wouldn’t be qualified for. Credit building: If the primary borrower is able remain on top of their payments, the credit score of both the primary borrower as well as the co-signer may be improved. Reduce costs: If the cosigner is a good to good credit score and the primary borrower is in good standing, they can qualify for a lower interest rate and fees. Risks of co-signing on a car loan Responsibility for payments: If the borrower defaults the co-signer will be responsible in charge of all loan payments. There is no legal claim co-signer does not appear listed on the title and has no legal claim to the vehicle. Co-ownership of a car is a legal option. In the instance of a car both the owner and the co-owner are listed on the title. Having a co-owner doesn’t change the fact that the primary borrower has the title to the property. If the car is named and the primary borrower might need permission before they can sell the vehicle. Benefits of co-owning a car Security for the co-owners: The co-borrower has the safety of having their name listed on the title. More favorable terms: When both of the borrowers have good credit the primary borrower might receive better conditions than if they were applying independently. There are risks associated with co-owning a car. equal rights: The co-borrower is granted the same rights to the vehicle as the principal borrower. This means the co-owner must take part in transfer of the vehicle. Insurance: Even if the co-owner doesn’t use the car, they will likely have to be covered by the insurance policy. This can mean higher costs for everyone involved. The best option is to choose between co-signing or co-owning the car. The primary distinction between co-signers and co-borrowers is the level of investment of the loan. Co-borrowers have more responsibility and control over the loan than cosigners. Co-borrowing is best for people who both have good credit and want equal rights to the vehiclefor example, couples who want to buy a car together. On the other hand, a for a borrower who isn’t eligible for the loan even if they is in need of assistance to qualify for more money or a low interest. How to prepare to co-sign or purchase the car. To be a co-signer on the loan, you’ll need to be able to prove a steady income and be able to meet the credit score requirement established to be met by the lender. The same is required for being a co-owner because the credit score of both the people who are borrowing is taken into consideration. Even if you meet the requirements, a candid conversation should be had between the two parties. Co-signing or co-owning each comes with significant risk to credit. Be sure to have a plan in place in case the borrower who is primary will not be able to pay. The bottom line is that there are many reasons you may choose to co-sign or co-own the car with another individual. In any event it is essential for both of you to be on the same page about what the relationship entails and what expectations are expected of both of you. Learn more

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Written by The article was produced using automation technology, and was thoroughly checked for accuracy and quality by an editor on 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 enthusiastic about helping readers gain the confidence to manage their finances through providing concise, well-studied information that breaks down complex subjects into bite-sized pieces.

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

Nationally anerkannt student financial aid expert

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