Co-signer Release

Full definition

A co-signer release provision lets the primary borrower remove the co-signer's legal obligation from the loan once certain conditions are met. The co-signer's name is removed from the promissory note, ending their liability for the remaining balance. Typical eligibility requirements: Most lenders that offer co-signer release require (1) a minimum number of on-time payments (usually 12-24 consecutive months), (2) the primary borrower meeting the lender's standalone credit and income requirements at the time of the request, and (3) no current delinquency on the account. How to request it: Submit a formal co-signer release application to the lender. The lender reviews the primary borrower's current credit score, DTI, and income as if underwriting a new loan. If the primary borrower qualifies alone, the co-signer is released. If not, the request is denied and the co-signer remains responsible. Lenders that offer co-signer release for personal loans: This feature is more common on student loans and auto loans than personal loans. Sallie Mae and Earnest offer co-signer release on student loans. For personal loans, this feature is less standardized. Check your specific loan agreement for the co-signer release provision before signing. If no co-signer release provision exists: The only way to remove a co-signer from a personal loan that lacks this provision is to refinance the loan in the primary borrower's name alone. The new loan pays off the original, and the co-signer is no longer on the obligation. This requires the primary borrower to qualify independently at current rates. Impact on co-signer until release: Until the release is granted, the loan appears on the co-signer's credit report. Every late payment affects the co-signer's credit score. The loan balance counts toward the co-signer's DTI if they apply for their own credit.

• Co-signer
• Co-Borrower
• Refinance