Share on facebook
Share on twitter
Share on linkedin

Co-Owning a Car: Benefits, Risks, and How to Navigate Joint Auto Ownership Safely

Discover the advantages of co-owning a car with a partner or spouse, including shared expenses and increased loan approval chances. Learn about potential risks and find expert advice on managing joint auto ownership responsibly.

Questions Answered in this Article

Question: What are the benefits of co-owning a car with a partner or spouse? Answer: Co-owning a car can provide convenience, shared financial responsibilities, and increase the likelihood of loan approval.

2. Question: What is the recommended down payment percentage when buying a car? Answer: Buyers should aim for 20% down payment for a new car and 10% for a used one, which can be split with the co-owner to reduce the initial financial burden.

3. Question: What’s the difference between co-signing and a joint auto loan? Answer: Co-signing means the co-signer is responsible for payments if the borrower defaults, while a joint auto loan involves equal responsibility for payments and shared ownership rights.

4. Question: What are the risks of co-owning a car? Answer: Co-owners share financial liability for the loan, and missed payments can impact credit scores, leading to collections. Additionally, removing someone from the loan or title can be challenging.

5. Question: How can I remove a co-owner or co-signer from a car loan? Answer: Options include refinancing, paying off the loan, requesting a co-signer release, or selling/trading the car. Each method has its considerations, and qualifications may vary

Should I Co-Own a Car With My Partner?

Purchasing a vehicle with a partner or spouse has the potential to be a smart financial move, but it’s essential to be aware of the risks and intricacies involved. Co-owning a car can offer several advantages, including convenience, shared financial responsibilities, and a higher likelihood of loan approval. However, understanding the ins and outs of this arrangement is crucial to avoid potential pitfalls.

Here’s what you should consider when it comes to co-owning a car:

Optimal Down Payment Strategy

When buying a car jointly, it’s essential to determine how to split the down payment. While some dealers or sellers may allow a single transaction for the down payment, others might require funds to be divided and sent to one buyer in advance. This approach can be advantageous as it enables you to contribute more towards the down payment, thereby reducing the initial financial burden.

Co-signing vs. Joint Auto Loans

Two primary options for financing a car with someone are co-signing or taking out a joint auto loan.

When a person co-signs a car loan, they agree to make loan payments if the primary borrower defaults. Co-signers generally have higher credit scores, which can help the primary borrower qualify for a loan or secure a lower interest rate. However, a co-signer does not have ownership rights to the car and is not listed on the title, even if the loan is fully paid off.

In contrast, a joint auto loan or co-borrowing arrangement entails equal responsibility for loan payments, and both individuals have ownership rights to the car. This approach provides a sense of ownership but comes with shared financial responsibility.

Assessing the Decision to Co-Own

While joint loans or co-signing may seem appealing, weighing the risks involved is crucial. Co-signers and co-owners share financial responsibility for the loan, meaning any missed payments can impact their credit scores and result in collections. If you possess sufficient income and strong credit to secure a loan independently, adding another borrower might not be necessary.

Challenges of Removing a Co-Owner or Co-Signer

Removing a co-owner or co-signer can be significantly challenging if your financial circumstances change. There are several options to consider if you wish to part ways with your co-owner or co-signer:

  1. Refinance: You can refinance the loan to remove a co-signer or co-owner. This involves taking out a new loan in one person’s name, making them solely responsible for the loan. Refinancing may provide a lower interest rate and longer loan term, but qualification depends on timely payments and good credit.
  2. Pay off the Loan: Paying off the loan in full relinquishes all borrowers of financial responsibility, but review the lender’s terms for early loan repayment.
  3. Co-signer Release: If your credit improves or your co-signer no longer wants to be on loan, you may request a co-signer release. This requires agreement from both the lender and the primary borrower, and changes in loan terms may occur.
  4. Sell or Trade the Car: Selling or trading the car will close the loan and release the title. This option is necessary if you want to remove a co-borrower from both the loan and car title.

Carefully considering these factors and discussing them with your partner or spouse will help you decide about co-owning a car. Always prepare for potential financial and credit implications, and understand your lender’s terms and conditions clearly.


  • Co-owning a car with a partner/spouse can offer financial advantages and convenience.
  • Down payment splitting helps reduce the initial financial burden.
  • Two financing options: co-signing (responsibility without ownership) or joint auto loan (shared responsibility and ownership).
  • Risks involved: shared debt liability, potential credit damage, and challenges in removing co-owners/co-signers.
  • Assess the need for a co-borrower: strong credit and income may make it unnecessary.
  • Removal options: refinancing, paying off the loan, co-signer release, or selling/trading the car.
  • Understand lender terms and conditions before making any decisions.
Don't miss out!

Sign up to our mailing list to get updates on new products and content as they arrive.