How to Remove Your Name from a Cosigned Loan

Before attempting to answer the query on how to remove you name from a co-signed loan, let us first examine what the act of co-signing a loan means. A relative or friend may come to you and ask you to co-sign a loan for him or her and it may appear that it is just a simple matter of signing your name on the dotted line.

The borrower may even assure you that the loan will be promptly paid. What you must realize is that a co-signer is needed because the credit score or history of the borrower is not sufficient to convince the lender. 
If you co-sign a loan, the effect is that you are serving as a guarantor that the loan will be paid and in case the borrower defaults, the lender would be able to come after you for the missed payments. This means that from the point of view of the lender and the law, you are liable for the debt as much as the actual borrower.

This even puts you in a worse condition than the actual borrower. In a car loan, for example, the borrower has possession of the car and if he decides to run, he has the car and you are left with a debt to pay. Take note that if you are a co-signer, you do not have co-ownership rights to the property, while a co-borrower has.

In answer to the question on how to remove your name from a co-signed loan.

This is not possible because the lender would not allow it.

To be able to cancel the contract in which you have agreed to be the co-signer, the loan should have been completed repaid or the lender would have to agree to it. I have never seen this happen or have found any actual people in my extensive research who have successfully done this.

This is not likely because the reason the lender needed a co-signer in the first place was that he did not trust the borrower enough to be able to make the payments.

Is it possible to remove your name from a co-signed loan by finding a replacement for you?

Again, this is not likely because this would mean unnecessary work for the lender in replacing the contract with a new one. It would also mean that the lender will have to do additional work in evaluating the creditworthiness of whoever would become the new co-signer.

Remember that another problem that you will encounter as a co-signer is that your credit score will also suffer if the borrower is late or is unable to make the payments.

One remedy is to find a way to repay the loan to prevent further damage to your credit score. If possible, ask the lender if you could refinance the loan to be able to negotiate a lower interest rate and to get the loan under your name only.

Your next problem would be on how to reclaim the property because it is in the possession of the previous borrower. This will be a difficult process if the borrower refuses to surrender the ownership of the property, such as a car, to you. Under these circumstances, it would be best to get the services of an attorney.

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