Published in: Personal Loans | Oct. 26, 2019

How to Get Off a Loan You Cosigned For

We are committed to full transparency as part of our mission to make the world smarter, happier, & richer. You should know that offers on The Ascent may be from our partners - it's how we make money. That transparency to you is core to our editorial integrity, which isn’t influenced by compensation.

Have you cosigned for a loan and now find yourself wishing you could escape responsibility for it? Here are your options for getting off the loan.

Cosigning for a loan is a big commitment and not one you should take lightly. For the entire time the primary borrower has the loan, you are going to be legally responsible to the creditor. 

If the borrower doesn't pay on time or defaults on the loan, your credit could be damaged and the creditor could try to make you pay. And even if the borrower does make on time payments, it will still show up on your credit report and could affect your debt-to-income ratio.

Two people signing a document.

Image source: Getty Images

Since there are so many potential risks to cosigning, it's something you should often say no to unless you really want to help a loved one get approved for credit that they otherwise would not be able to get. 

If you've already cosigned, however, it's too late to just say no. In these situations, it's important to understand what options you have for getting off the loan so it doesn't continue to affect your borrowing abilities. While your options are unfortunately limited, there are two possible ways you may be able to get off a loan you cosigned for. 

1. Ask the primary borrower to request cosigner release

With some types of loans, lenders are willing to release cosigners from their shared liability for the debt after the primary borrower has proven to be responsible.

Typically cosigner release is an option only for student loans. Private student loan lenders often make it possible for a cosigner to be taken off the loan after the primary borrower has made anywhere from 24 to 36 on-time payments (some lenders require more).  

The primary borrower usually needs to request cosigner release in order for this to happen. Find out whether cosigner release is an option for the loan you cosigned for and ask the borrower to apply ASAP. In some cases, it can even make sense for the cosigner to make a few payments to take the primary borrower over the line quickly. 

2. Get the primary borrower to refinance the loan

Cosigner release is not available on all types of loans you cosign for. For example, most personal loans or auto loans have no option for cosigner release. 

In these situations, the only way for the cosigner to be absolved of responsibility is for the primary borrower to refinance the loan. This means the borrower responsible for paying the loan back would need to apply for a new loan in his or her own name only and use the proceeds to repay the cosigned debt.

The primary borrower obviously needs to qualify for a refinance loan, which typically can happen only if his or her financial situation improved since applying for the original loan. Otherwise, the borrower is likely to run into the same problem of a lender not providing loan approval without a guarantee from someone with better credit or more income. 

If you think the borrower may be open to it, you could always try to work with him or her to improve their chances of loan approval, perhaps by helping them to come up with a plan to pay down debt, increase income, or build a positive payment history to improve their credit. 

If the primary borrower can qualify for refinancing, it is a fast and easy way to ensure the cosigner has no further responsibility for the cosigned debt. That debt can be paid off in full with the proceeds from the new loan. And the primary borrower then has the sole responsibility for paying back the new loan.

Your options for getting off a cosigned loan are limited

As you can see, your ability to get off a cosigned loan hinges on the behavior of the primary borrower -- as well as the type of loan that you have. Still, you can sometimes avoid being held legally liable for a loan for years if the primary borrower is willing to cooperate and can qualify for cosigner release or a new loan.

Be sure to keep in regular contact with the person you cosigned for and ask them to take advantage of these options when it becomes possible to do so. You did the borrower a favor by helping him or her get access to credit and he or she should hopefully be willing to work with you to get you off the loan ASAP so this debt is no longer hanging over your head.

Our Picks of the Best Personal Loans for 2019

We've vetted the market to bring you our shortlist of the best personal loan providers. Whether you're looking to pay off debt faster by slashing your interest rate or needing some extra money to tackle a big purchase, these best-in-class picks can help you reach your financial goals. Click here to get the full rundown on our top picks.