Having a cosigner can help you qualify for a car or title loan when your credit is limited or less than perfect. But once your loan is paid off, you might want full ownership of your vehicle, which means removing the cosigner from your car title.
The process is simple once you have your lien release and understand your state’s DMV rules. This guide explains how to remove a cosigner after payoff, what documents you need, and when refinancing might be required.
Key Takeaways
- To remove a cosigner, pay off your loan and get a lien release from your lender.
- Both parties may need to sign a title transfer form at your local DMV.
- A clear title proves full ownership once all liens are removed.
- Refinancing may be required if the cosigner is still tied to an active loan.
- New titles are usually issued within 10–15 business days after transfer.
What is a Car Title?
The car’s title is the legal document that establishes ownership and lists any co-owners or cosigners. It is essential for clarifying legal rights to the vehicle. The title lists important details like the owner’s name, the vehicle identification number (VIN), and any lenders or lienholders who have a legal claim to the car until a loan is paid off.
If there’s more than one owner, the title will show all names and whether both must sign to sell or transfer the car. Keeping your car title up to date is important because it shows who legally owns the car and who has the right to sell, transfer, or refinance it.
What Happens After Car Loan is Paid Off
Once the loan is fully paid, your lender sends a lien release to the DMV.
Most states mail your clear title within 2–6 weeks2, or faster if you request an electronic title.
Make sure your lender confirms that the lien has been removed before you attempt a title transfer.
Step-by-Step: How to Remove a Cosigner from a Car Title
- Check the Names on Your Current Title
- If names are listed with “and”, both parties must sign to make changes.
- If listed with “or”, some states allow one owner to remove the other alone.
- Get the Lien Release
- Request a lien release letter or clear title from your lender.
- Verify that the DMV shows no active liens before starting the transfer.
- Complete the Title Transfer Form
- Visit your DMV website or office for the correct form.
- Both you and the cosigner may need to sign, depending on state rules.
- Submit the Paperwork and Pay Fees
- Bring ID, lien release, and transfer form to the DMV.
- Pay the title transfer fee (usually $15–$25).
- Receive the Updated Title
- The DMV issues a new title showing you as the sole owner.
Reasons to Remove a Cosigner After Loan Payoff
If the cosigner was added to the title and listed as co-owner you might want to remove them once you’ve paid off your car loan. Common reasons include:
- Changes in relationship status; a divorce decree can specify who will keep ownership.
- Removing them from your car title can give you full ownership and control.
- Keeps their name clear if any future issues arise with the car.
- You want to sell or trade in the car without involving the cosigner.
- Insurance, registration, and title updates are simpler with only your name on the title.
- No need to keep cosigner on the title, if they were only used to get approved for loan.
Cosigner or Co-Owner?
When updating a car title, it’s important to know whether the other person is a cosigner or a co-owner because they’re not the same thing.
What is a Cosigner?
A cosigner is someone who helps you get approved for a loan by using their good credit. They don’t get any of the money or own the car, but they are equally responsible for paying back the loan.
If you miss a payment or can’t pay off the loan, the cosigner must pay it instead. This can negatively affect the cosigner’s credit score and increase their debt-to-income ratio, making it harder for them to qualify for new credit. The cosigner impact includes potential changes to their financial standing, as their credit and ability to borrow can be affected by your actions. Once the loan is fully paid off, the cosigner’s responsibility ends, but their name may still be on the title until you take steps to remove it.
What is a Co-Owner?
A co-owner, on the other hand, may have co-borrowed the loan, meaning both borrowers are listed on the loan and the car title. In these types of loans, both parties share joint responsibility and ownership, and both borrowers’ financial standing can affect the terms and management of the loan. Understanding the differences between cosigned loans and co-borrowed loans is crucial for managing your financial and legal obligations.
Cosigner vs. Co-Owner: Know the Difference
| Role | Ownership | Responsibility | Common Use |
|---|---|---|---|
| Cosigner | Not an owner | Repayment guarantee | Helps with loan approval |
| Co-owner | Joint ownership | Shared repayment | Shared purchase or marriage |
If your cosigner is on the loan only, removing them from the title gives you full legal ownership. If they’re a co-owner, both signatures are required for any title change.
What if a Cosigner Does Not Cooperate?
Most of the time, cosigners are happy to sign paperwork to be removed. But sometimes, a cosigner might be unavailable or unwilling to help.
If your title says “and,” you usually need their signature to transfer ownership. In that case, you may need to:
- Talk to the cosigner to explain why removal helps them, too.
- If the loan is still active, offer to refinance the loan under your name alone.
- Seek legal advice if they refuse and you can’t resolve it directly.
If your title says “or,” you might be able to remove them without their signature, but always check your state’s DMV rules first.
Refinancing to Remove Cosigner
Refinancing your active auto loan is another effective way to remove a cosigner.1 This process involves applying for a new loan to pay off the existing loan or current loan, but without the cosigner. Your credit history, income, and making car payments on time are important factors that affect your ability to qualify for refinancing and secure a favorable interest rate.
A refinance can lead to better interest rates, different loan terms, and smaller monthly payments. Alternatively, you can use a personal loan to pay off the auto loan and remove the cosigner. To successfully remove a cosigner during refinancing, sign a change of title form and provide specific documentation to the new lender. This ensures the new loan is solely in the primary borrower’s name, giving them full financial responsibility and ownership, along with a cosigner release option.
Summary
Removing a cosigner from your car title is straightforward after payoff, simply gather your lien release, fill out the DMV transfer form, and submit it with both parties’ signatures.
If your loan is still active, refinancing may be necessary.
Once complete, you’ll receive a clear title with your name as the sole owner.
FAQ
What Happens to a Cosigner When a Car is Paid Off?
When you pay off the loan, the cosigner’s legal responsibility for the debt ends. However, their name may stay on the title until you transfer it.
Can a Cosigner Take Full Ownership of a Car?
Not usually. Unless the cosigner’s name is on the title as a co-owner, they have no claim to the car itself — just responsibility for the loan.
Does Removing a Cosigner Affect Your Credit?
Paying off or refinancing the loan can slightly change your credit score. Removing a cosigner from the title alone doesn’t usually affect your credit, but closing a loan account might.
How Long Does It Take to Receive a New Title After the Transfer?
You can expect to receive your new title within 10 to 15 business days after submitting the title transfer documents.
