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 aim is to assist you make better financial decisions by providing you with interactive tools and financial calculators as well as publishing objective and original content, by enabling you to conduct research and compare data for free and help you make financial decisions with confidence. 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 deals that are displayed on this site come from companies that pay us. This compensation could affect how and when products are featured on this website, for example, for example, the sequence in which they be listed within the categories of listing, except where prohibited by law. This applies to our loan products, such as mortgages and home equity, and other home loan products. But this compensation does affect the information we provide, or the reviews you read on this site. We do not include the entire universe of businesses or financial deals that could be available to you. FG Trade/Getty Images

2 minutes read. Published October 28, 2022

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Written by Bankrate This article was generated by using automated technology. It was then thoroughly edited and fact-checked by an editor on our editorial staff. Edited by Rhys Subitch Edited by Auto loans editor Rhys has been writing and editing for Bankrate since the beginning of 2021. They are dedicated to helping their readers to control their finances. They provide clear, well-researched facts that break down complex topics into manageable bites. Written by Mark Kantrowtiz and reviewed by Nationally acknowledged expert on student financial aid Mark Kantrowitz is an expert on financial aid for students as well as the FAFSA as well as 529 plans, scholarships, education tax benefits and student loans. The Bankrate promise

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We receive compensation for the promotion of sponsored goods and services or by you clicking on certain links posted on our website. This compensation could impact how, where and when products appear within listing categories and categories, unless it is prohibited by law. We also offer mortgage, home equity and other home lending products. Other elements, such as our own rules for our website and whether the product is available in your area or at your self-selected credit score range can also impact the manner in which products are featured on this site. We strive to offer the most diverse selection of products, Bankrate does not include information about each credit or financial products or services. Co-signing and co-owning a car are two different approaches to applying for the loan with another borrower. In both instances the second borrower has to have a good credit score and earnings to pay for their loan on their own. Each has advantages and drawbacks, depending on what the parties want. There are some differences between a co-signing or co-owning of vehicle. A co-signer is a person who is equally responsible for paying off the loan, but doesn't have any legal ownership of the vehicle. A co-owner has equal claim towards it. Co-signing for an automobile loan In the case of a car co-signer, the co-signer is required to take on the monthly repayments if the borrower is unable to make the payments. This is a big choice to make and could be . Benefits of cosigning on the car loan Assistance in getting a loan: A co-signer may be eligible get a car loan that they would otherwise not be qualified for. Improve credit score: In the event that the borrower is able to stay on top of payments, the credit score of both the primary borrower as well as the co-signer could be impacted positively. Reduce costs: If the co-signer has a very good or good credit score, the primary borrower can qualify for a lower fee and interest rate. Risks of co-signing on an auto loan Responsibility for payments If the borrower fails to pay the co-signer will be responsible for the entire loan payments. There is no legal claim Co-signer: The co-signer isn't in the title of the car and does not have any legal right to the car. Co-ownership of a car In the instance of a car both the owner and co-owner are on the title. The fact that a co-owner is listed doesn't change the fact that the primary borrower owns the property. If the car is registered and the primary borrower might require permission to sell the car. Benefits of co-owning a vehicle Co-owners are safer Co-borrowers have the security of having their name listed on the title. More favorable terms: When both borrowers have good credit, the primary borrower may be extended better terms than if they applied on their own. Risks of co-owning a car Equal right: A co-borrower is granted the same rights to the vehicle as the primary borrower. The co-owner is required to be involved in the sale or transfer of the car. Insurance In the event that the co-owner does not use the car, they'll likely be required to sign the policy of insurance. This could mean more expensive costs for everyone concerned. The best option is to choose between co-signing and owning an automobile The most significant difference between co-signers and coborrowers is the level of investment on the loan. Co-borrowers are more accountable and have greater control over the loan than cosigners. Co-borrowing is best for people who have good credit and want equal rights to the car -like couples who want to purchase a car together. On the other hand, co-borrowing is for those who wouldn't qualify for the loan in the first place, or requires assistance in obtaining more money or a low interest. How do you prepare for co-signing or co-owning the car. To be co-signer for a loan you must have a steady income and meet the criteria for credit score established to be met by the lender. This is the same for being a co-owner, because the credit score of both the borrowers is being considered. Even if you satisfy the criteria, an open dialogue should be conducted between the two parties. Co-signing and co-owning both carry significant credit risk. Be sure to have a plan in place in case the principal borrower is unable to pay. The bottom line is that there are a variety of reasons why you could choose to co-sign or co-own a car with another person. In any case it is essential that both parties are on the same page about what their relationship is about and what expectations are expected of both of you. Learn more

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Written by This article was produced using automation technology, and thoroughly edited and fact-checked by an editor on our editorial staff. Edited by Rhys Subitch Edited by Auto loans editor Rhys has been writing and editing for Bankrate since late 2021. They are dedicated to helping readers gain confidence to manage their finances with precise, well-researched and well-researched information that breaks down complicated topics into digestible pieces.

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

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