Co-Sign vs. Joint Auto Loan

When applying for an auto loan with another person, it may have been proposed that you choose between co-signing or becoming a joint applicant. Depending on which option you choose, you can end up with very different results. The key to choosing depends on what you want to accomplish with the vehicle. Lets take a look at the difference between the co-sign and the joint auto loan.

Co-signing an Auto Loan

The co-sign option was originally intended to assist a person who is having problems on their credit report and needs a reputable person to agree to financially responsibility if the owner cannot make the payments. In other words, a co-signer can be legally responsible for making payments, but has no ownership right to the vehicle. This means, if you want to seize the vehicle or demand auto insurance payments if wrecked, you have no right to do so.

This option comes with a ton of risks and is usually not a recommended form of ownership. So if your intention is to actually take partnership in owning the vehicle, taking this option is something you want to shy away from.

Joint Auto Loan

If you become a joint applicant while you will be responsible for making payments you will have equal rights to the cars use. So in the previous case, where you were not able to seize the vehicle or insist upon auto insurance payments being made, with you taking on joint auto ownership, you can do all of these things.

If you have any interest at all in co-owning a vehicle, or plan to take financial responsibility, its best to become a joint applicant rather than simply co-sign for it.