Grace Enfield, Content Writer
@grace_enfield
A cosigner can get out of a loan by trying to get a loan release, which is permission from the lender to remove the cosigner's name from the loan. The cosigner can also remove their name if the primary borrower pays off the loan, transfers the balance to a credit card or refinances the loan.
Ways a Cosigner Can Get Out of a Loan
Get a loan release
Some lenders can release cosigners from the loan under certain conditions. The primary borrower generally has to make a certain number of on-time payments and meet the requirements to have the loan on their own.
However, most lenders won't let you know when you can be released from the loan. You'll have to reach out to the lender to see if it's an option.
Move the loan to a 0% balance transfer credit card
Another way to get out of the loan is to have the primary borrower apply for a 0% balance transfer credit card. If they get approved, they can pay for all or part of the loan's balance with the card. Then, they have to pay the balance on the card to the credit card company. The borrower may be subject to a higher regular APR than the original loan had if they cannot pay off the balance within the 0% APR introductory period, though. You can use WalletHub's free balance transfer calculator to see if transferring a balance is right for your situation.
Refinance the loan
Refinancing a loan means taking out a new loan with a lower rate to pay off your existing loan. This can be an easy way to get off the hook if the primary borrower can qualify for the new loan on their own.
The primary borrower will need to meet all of the new loan's requirements to be considered. Some requirements include being at least 18 years old, having enough income to make monthly payments and meeting the lender's credit score requirement. However, just meeting the requirements does not guarantee approval.
Pay off the loan
If the primary borrower isn't making payments or hasn't built their credit score enough to refinance, you could just pay off the loan entirely. This can be an expensive way to solve the problem, but if you have the funds, it may save your credit score from future damage.
To see how your credit score may be impacted by paying off the loan, check out WalletHub's free credit score simulator.
People also ask
What is a cosigner release?
A cosigner release is a document the lender provides that removes the cosigner’s name from the loan agreement. To be approved for a cosigner release, the primary borrower must meet certain conditions, like having a high enough credit score to manage the loan on their own and making a certain number of on-time payments. Once the cosigner is released, they are no longer responsible for repaying the loan if the primary borrower cannot.
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