It’s not uncommon for a person to need a co-signer for a car lease. The person might have bad credit, for example, or might not have a high enough income to qualify for the lease alone. In some cases, a person might ask you to co-sign on their loan so that they can get a better interest rate.
Regardless of the reason why someone might have asked you to co-sign for a car lease, you might want to have your name removed from the car lease as soon as possible. For example, the primary lessee might not be making the payments on time, or you could be concerned that this will happen, which can cause your credit score to be affected. You could also be concerned about your debt-to-income ratio, such as if you are in need of a car yourself or if you are trying to buy a home. Even if you aren’t making the payments on the leased vehicle, your debt-to-income ratio can be affected if you are a co-signer. Basically, a future lender might assume that you have too much debt and might not allow you to take out another loan that you might need if you are a co-signer on a vehicle.
Luckily, there are options. These are two of the main things that you can look into if you’d like to be removed.
Refinancing the Loan
First of all, if the primary lessee has been working on his or her credit, he or she might be able to qualify for a loan of his or her own. If this is the case, he or she can refinance the loan so that there will no longer be a lease loan in your name. Depending on the situation, however, he or she might end up with a higher interest rate in this situation. It is important to encourage him or her to shop around to find the best possible loan option.
Getting Out of the Lease
Another option that can allow you to get your name off of a car lease is if the person who is responsible actually gets out of the lease completely. There are a few ways that this can be done; for example, you and the person who originally signed for the loan can return the car to the dealership. Unfortunately, this can come with some pretty hefty fees, so you may want to avoid this if at all possible.
There are other options, however. For example, the other person on the lease can go to the dealership and trade in the current leased vehicle for a new leased vehicle, with a new loan to cover it in his or her name only. In some cases, selling the car and paying off the loan is an option as well. You can also find out about having someone else take over the lease; however, make sure that you check the paperwork carefully to ensure that you and the other current lessee will not be held responsible for the loan in case of a default.
As you can see, if you have co-signed with someone on a car lease and are looking to have your name removed from the loan, there are options. If you talk to to the primary lessee about your options, you might be able to come to an agreement that will work for everyone and that will result in you no longer having your name on the car lease.