Does a Cosigner Own the Car? A Look at Ownership Rights

Obtaining a car often involves financing, and for many, this process includes the involvement of another individual to secure the loan. This arrangement, known as cosigning, is common in automotive financing. It provides lenders with additional assurance when a primary applicant might not fully meet lending criteria.

Roles in an Auto Loan

An auto loan typically involves two main parties when a cosigner is present. The “primary borrower” applies for the loan, uses the vehicle, and is responsible for repayment. The lender primarily assesses this person’s credit history and income to determine loan eligibility and terms.

Conversely, a “cosigner” pledges to repay the loan if the primary borrower defaults. Their creditworthiness reduces lender risk, helping the primary borrower qualify or secure better rates. While providing financial backing, a cosigner typically does not have ownership rights to the vehicle.

Car Ownership Documents

Legal car ownership is established through specific documentation, primarily the vehicle title, also known as a Certificate of Title. This document serves as legal proof of ownership, identifying the vehicle’s legal owner and containing information like the Vehicle Identification Number (VIN), make, model, and year.

Vehicle registration is also required to legally operate a car on public roads. Registration connects the vehicle to its owner, including details like the owner’s name, address, and the vehicle’s identifying information. Unlike the title, which proves ownership, registration primarily confirms the vehicle’s legal permission for road use and is typically renewed periodically.

Cosigner’s Name on Vehicle Documents

A common point of confusion is whether a cosigner’s name appears on vehicle ownership documents. In most cases, a cosigner’s name is not placed on the vehicle’s title, which legally establishes ownership. The cosigner’s role is primarily financial, supporting the loan application, not acquiring ownership interest.

The vehicle title usually lists the primary borrower as the owner. If financed, the lender’s name often appears as a lienholder, indicating their security interest until the loan is repaid. While registration documents also reflect the primary borrower, rare exceptions exist where a cosigner might be added as a co-owner. This requires specific action, like explicitly being listed as a joint owner on the title, distinct from standard cosigning.

Cosigner’s Financial Obligation

Despite not owning the vehicle, a cosigner assumes a substantial financial obligation. By signing the loan agreement, they become equally responsible for the entire loan repayment. If the primary borrower fails to make payments, the lender can pursue the cosigner for the outstanding debt.

This responsibility exists independently of who drives the car or makes regular payments. The cosigner must cover any missed payments, including late fees or collection costs. The loan also appears on the cosigner’s credit report, meaning late or missed payments by the primary borrower can negatively impact the cosigner’s credit score.