How To Get Your Name Off A Car Loan After Divorce?
How to get your name off a car loan after divorce? After divorce, assets (especially big-ticket items) are usually divided between ex-spouses. So what happens to a car that only one of you is driving when both of you are in the title?
Co-borrower on a car loan
Even if you no longer drive the vehicle you and your ex are partners in, it can still affect your credit if there’s a missed payment — even if the divorce decree says your spouse is responsible. It doesn’t matter who is currently using the car. Since both the names are on the loan and the title of the vehicle, you are equally responsible for the car loan. The same goes for a potential default or repossession, which can drastically lower your credit score for both.
Good news: you can remove your name from the loan and take your name off the title. This can be done by refinancing the car loan and making one of you the sole owner of the vehicle.
Refinancing is the only way how to get your name off a car loan after divorce. However, if you want to take your name off the car loan, your ex must qualify for refinancing and prove that they can pay the payment themselves.
How To Get Your Name Off A Car Loan – Qualification for refinancing
To determine if your ex can refinance the loan and remove their name from the title, there are a few boxes that need to be checked. Lenders differ in their requirements, but here are the general rules for refinancing:
- The vehicle must have equity (you owe less to the car than its cash value).
- The car loan must be at least one year old.
- The vehicle must have less than 100,000 miles.
- The car must be less than 10 years old.
If the vehicle meets these requirements, your ex may be on track to refinance and remove your name from the title.
However, there are also income requirements that must be met. If your ex decides to refinance and can’t afford the car himself, you probably won’t be able to get your name off the loan. However, refinancing doesn’t just remove associates from a loan.
How To Get Your Name Off A Car Loan After A Divorce – Change Loan Terms
Refinancing replaces the original loan with a new one. This is usually done to lower the monthly payment, get a better interest rate, or extend the term of the loan. Not only can your ex get you out of the loan with refinancing, but they can also adjust the loan terms to make the monthly payment more manageable.
If your ex’s credit score has increased since the loan began and they are currently making payments, they may qualify for a better interest rate. This saves borrowers interest over the life of the loan, lowers the monthly payment, and is the ideal way to refinance.
Another way to refinance is to extend the term of the loan. Extending the loan won’t save you money in the long run if the interest stays the same (borrowers pay more interest this way), but it does lower your monthly car payment.
Your ex can also do both: reduce the interest rate and extend the loan term, if he is eligible. So they can refinance the loan, remove their name and lower the monthly amount so they can pay for the vehicle themselves.
Getting into another car after divorce
After a divorce, credit scores tend to drop due to the split of finances in addition to the additional costs of the divorce. And if you don’t have a car at the end of the divorce, a lower credit score can make transportation difficult, but it’s possible with the right lender.