EPS 18 - Getting Someone off your Auto Loan

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hey hello hello

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this is jerry and welcome to the pink money podcast where we talk all about things related to money from a gay perspective. And, you know, a friend of mine was asking me about his little sister who she said she was trying to get her car just put in her name. And she was a little confused about how to do that because she just didn't want to have... She just wanted the car to be in her name only. So she had total control over it, which is fine, right? And... what that really means in that case is you have to work with the lender. So if there's a loan on it and the bank is holding that note, then you have to get the bank to release the cosigner. And if you owned it in joint names, let's say, you know, you and Bob, then you have to get Bob off of it, which is fine too. But again, The only way the bank is going to let either the co-signer or Bob off of it is you're going to have to qualify for that loan yourself. So if you're ready to do that, then you just put an application into the bank and tell them what you're trying to do, and they should be able to just simply transfer that title into your name. Now, if Bob owns that car along with you, He may not want to give that up easily, and so you just have to negotiate something with Bob. I don't know. Maybe you have to pay him off, or I don't know. Maybe he's just willing to get off of it. So that just really depends. So nevertheless, if it's just a family member who's co-signed for the loan, then again, the bank will probably let you put that in your own name if you've had a good track record of... paying the bill on time, every time, every month. So that also goes to speak to what your credit looks like. So usually the bank is also going to pull your credit report and they're going to take a look and see, you know, if there's anything else that's gone awry since the last time they looked at your credit report when they initially gave you the loan or maybe hopefully things have improved and your credit score has gone up. So if you're unsure, one of the easy things you can do is go to annualcreditreport.com. You're entitled to a free credit report every year from the three major credit reporting institutions, Experian, Trans... Oh my God, I just drew a blank. TransUnion, there you go. So Experian, TransUnion, and Equifax. There you go. So anyway... you have to get a copy of your credit report from each of the three and you just want to comb through it and see if there's any mistakes. If there's anything that's wrong, you need to dispute it. And that will typically take about 30 some days, but you won't get your score. And I think I've mentioned this before. You have to buy your score and your score is probably going to cost you less. Things have changed. It used to be about$15. I don't know. Like everything has probably gone up. I haven't checked that in quite a while, but nevertheless, you just buy your score and you, probably don't even need to get it from all three. And it doesn't mean, though, that that's a be-all, end-all either because if you get your score and, you know, let's say it's in the, I don't know, the low 600s. So the bank in their lending criteria may, and they probably will, use other criteria to rate you as a good borrower And with whatever criteria that they use. So what I'm saying is they usually strictly don't go off of just the credit report. But, you know, just really depends. And the bank really isn't probably going to tell you exactly what their criteria is. But, you know, every institution has a little bit different scoring system. But anyway, it's always a good idea to keep your... relationship strong with your credit union or whatever bank you use. And that means that when you do decide that you need some help and maybe your credit isn't as strong as it needs to be, then usually working with someone and they can put a face to a name, et cetera, then they may be a little bit more lenient with you. Now, who knows, you know, they may ask you to put a little money down as well, but hopefully they don't. And it all depends on what the value of this vehicle is as well, because although you've probably been paying it down, the other thing about vehicles is, of course, a decrease in value as well. So you want to be able to get the loan and you want to make sure that the car is in good condition so that the bank, when they do lend you the money, if you, you know, for whatever reason, God forbid, quit paying, uh, the bill, then you want to, um, they're, they're going to want to make sure that the car's in good condition because if they had to repossess it, then they're going to sell it and they're going to get whatever they can for the car. And then you're going to know the difference between how much you owe on the bank loan and how much the, they were able to get at auction for your car. So, I'm just saying that's something to take in consideration. The other thing I would recommend is if you do end up refinancing the vehicle with the bank in your own name, you know, my bet, my recommendation would be to also ask about gap insurance. And what gap insurance does is covers that gap, let's say between the note and the value of the vehicle. And that, will be important if, let's say, for some reason that there is an auto accident with your car and the value of the car is a lot lower than how much you owe on it, how much you owe on the loan. So let's say you owe$5,000 and because of the auto accident, et cetera, maybe even before that, The car was only really valued at, let's just say, you know,$4,000. So there's a$1,000 difference, and a gap insurance will cover that difference. And it's really pennies on the dollar in the grand scheme of things. And sometimes, I mean, I guess it depends on the institution, that they will come out and just offer that to you, or you have to just... be aware that it's something that you would want to ask about and say, hey, I would like to buy a gap policy for this. And hopefully they will. If they don't for some reason, then the best thing you can do is go into the general marketplace and buy a gap insurance policy. Now typically you have to do that pretty quickly, and I would say quickly means probably within the first 30 days of owning that car, taking out this loan. So... They're not going to usually let you take out a gap policy six months or a year into owning this vehicle. I'm just saying they don't want to be out there trying to provide you with this gap insurance policy if the car is not really going to be worth it and who knows what's going on. Anyway, so just if you're trying to get somebody off of a loan, the only way the bank is going to let you off... let that person off the loan is if you can qualify on your own. So as long as you have a good, strong income and your credit is not terrible and maybe have some additional resources on the side, possibly may or may not be necessary, and you don't have too much outstanding debt. Um, so if you have a lot of credit cards that have high balances, et cetera, that will probably weigh negatively on you. And of course that will be reflected in your credit score as well, because, you know, credit utilization is about 15% of your score. So you want to keep your balances under 50% on all your credit cards. And of course, like I said, the biggest part of that is paying your bills on time, every time, every month. So, um, Just in summary, getting somebody off the car loan is not too terribly difficult. You just have to qualify on your own. And then once the bank allows you to take full possession of the car, then they're going to give you a title that will be eventually just in your name only when the loan is paid off. So you won't have to try to get anybody else off the loan. title later on down the road. That can always be tricky and difficult. So don't forget about the gap insurance and also don't forget to keep while you have the car in full coverage because you don't want to find that you've been carrying only liability and then you have an accident and the car doesn't get paid off or fixed. So that would be a terrible situation. Usually the bank is going to require that you have full coverage while you have the loan, but it's still just a good idea that you have full coverage. And when you take out that full coverage with your insurer, you want to make sure that you review that insurance on a regular annual basis, meaning every year. talk to your insurance agent or call the insurance company and just double check and make sure that they haven't changed the policy in any way, shape or form on your car and that you have a deductible that you're able to meet. So meaning I've seen deductibles that go up to$1,000,$1,500, etc., That just means your premium is going to be a little bit lower, but if you don't have$1,500, et cetera, at the time that you need it, then that wasn't very helpful at all. So try to keep your deductible in a reasonable amount as long as you can afford it. That's what I'm saying, in a reasonable, affordable amount. So if it's$500, just make sure you got$500 stuffed away somewhere. So that's my recommendation to you. That's all pretty much it. Hopefully you find that a little bit helpful. You know, it reminds me similar about topics about refinancing the house. And some of what I told you about pretty much everything I talked about is really just the same. If you're trying to get somebody off of a title of a home, it's just exactly the same thing. You have to qualify on your own. and like in a divorce, etc., then you're going to have to make sure that you can afford the home and that the loan terms are in your favor. And that really means in a situation where you have changing interest rates like we do now, where interest rates are fairly high, you may not be getting the same favorable rate that you had when you originally took out the loan. That's just how it goes. So the better... credit score you have, then the lower your interest rate is going to be. And the more shopping you're able to do, if your credit is not so good or terrible, the more difficult time you're going to find all the way around and your interest rates are going to be pretty high. Now, I'll just throw this one last thing out. If let's say that is the case that they will go ahead and allow you to take out the loan and kick the other borrower off, but the interest rate is going to be high. I'd say go ahead and do it. So yes, it's expensive, but you're not going to let that loan remain that loan with that high interest rate forever. So eventually interest rates will drop. This is a temporary situation we're in. But you want to go ahead and just bite that bullet and get that other person off. And then you can always refinance these loans later on down the road with more favorable interest rates when it presents itself. And you can always look to for sometimes a variable rate. I don't usually recommend variable rates because anything can happen with interest rates and then you could find yourself, you know, in a precarious situation. However, if the likelihood of interest rates going down is pretty good, then, you know, maybe worth it. Now, in the case of where we are now, right now in today's world where interest rates have been going up and, you Even though the Fed has, you know, been trying to keep inflation at bay, they haven't been able to really tame that animal yet. So what they've been doing is raising interest rates, and that just hurts you all the way around with your credit card rates and your car loan rates and your mortgage rates, et cetera. So even though they're not pegged, you know, one-on-one, nevertheless, as in an interest rate environment where, you know, the– Inflation is high and the Fed has had a tendency to raise interest rates. You're going to be paying more. That's all I'm saying. And eventually, though, you should be able to refinance that. And you might be taking it in the shorts, as they say, a little bit. But still, it may be a better idea to get that person off sooner rather than later because there's lots of reasons why. And I'm sure everybody has their reasons why they want to only have something in their name only. So... Hopefully that helps, like I said. All right, guys, that's it for me. You guys have a great day, and we will be talking later.