My fiancé co-signed on my car loan, but we are no longer together. Can I remove her from the loan? If so, how?
-S. Williams, Baltimore
The short answer is: it depends. Your lender may let you remove a co-signer if it concludes that you will be a good credit risk by yourself. Your first step should be to contact your lender and ask if you can remove her. However, many lenders are hesitant to do this because the interest rate on your loan is based on both of your credit scores, so it is unlikely to remain the same based on your score alone. In addition, lenders are not under any legal obligation to remove a co-signer.
If your lender declines, you can achieve the same result in a different way, says Deanna Sclar, author of Buying a Car for Dummies (Wiley; $16.99). Your remaining option is to refinance the car in your name. Your credit score will be vital: “If the [remaining borrower's] credit rating is lower than the co-signer’s, the rate for the refinance may be higher,” Sclar says. If this is your situation, and you’ve parted ways amicably, Sclar suggests you might want to consider keeping your present loan as is to avoid the higher monthly payment until you can refinance on more favorable terms.