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Can You Remove a Loan Cosigner?

Man Signing Paperwork


If your credit score is less than ideal or you have yet to establish credit, you may have chosen to add a loan cosigner to improve your likelihood of getting approved for a Toyota finance plan. 

Is it possible to remove a loan cosigner down the road? While cosigner removal may be a bit of a challenge, it is generally possible. Keep in mind that there may be restrictions and options that vary by lender, but you will typically have some sort of option to adjust your loan or contract. Learn more about cosigner removal in this guide from North Hollywood Toyota. 

The Purpose of a Loan Cosigner

Why can it be beneficial to add a loan cosigner if your credit score needs work around Los Angeles and Glendale? Here is why it can be beneficial to consider this option: 

  • If your credit is low due to missed payments or a high debt-to-income ratio, adding a loan cosigner proves that someone else is confident that you can take care of the auto loan. 
  • Adding a loan cosigner gives the lender more confidence because the cosigner is there to step in and make payments if needed. 
  • Before you decide to add a loan cosigner, remember that this is a financial risk for that person. If you do not make your payments, it can damage your cosigner’s credit. 

At some point down the road, you or your partner might be wondering about cosigner removal. For example, the added debt involved in becoming a loan cosigner could be preventing that person from taking on other loans or tackling different projects. 

Steps for Cosigner Removal

  • Refinancing Your Loan – ‘Refinancing’ allows you to establish new loan terms with the same lending partner or a different lending partner entirely. If you have the opportunity to refinance on your own, your cosigner’s name will be removed. The process can also help you get a better interest rate in some cases. This is a good option if your credit score has undergone a boost since you initially took out the loan.
  • Cosigner Release – Your loan contract may have a cosigner release option. If you’ve made enough on-time payments, some contracts allow for cosigner removal right away. 
  • Sell the Car and Pay Off Your Loan – If you are still trying to remove the loan cosigner and the above options are not available to you, another option is to sell the car and pay off the loan in full. Be sure that you are not underwater on the loan if you are thinking about this option. 

Learn More About Your Toyota Finance Options 

If you still have questions about your Toyota finance options, the team at North Hollywood Toyota is here to help and provide useful tips. You can contact us or stop by in person. We’re just a short drive from Burbank.

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