Can the Cosigner Sell the Car

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Can the Cosigner Sell the Car? Understanding Your Rights and Responsibilities

So, you cosigned on a car loan for your nephew, your best friend, or maybe even your adult child. At the time, it seemed like a no-brainer—you wanted to help them get on their feet, build credit, or just get reliable transportation. But now, months or even years later, you’re staring at a mountain of missed payments, skyrocketing insurance costs, or maybe even a repossession notice. And the question that keeps popping into your head is: Can the cosigner sell the car?

It’s a fair and surprisingly common question—one that doesn’t always have a straightforward answer. The truth is, being a cosigner on a car loan comes with serious legal and financial responsibilities, but it also comes with certain rights. And yes, in some cases, the cosigner can sell the car—but only under very specific conditions. This post will walk you through everything you need to know about cosigner rights, ownership, and what steps you can take if you’re stuck in a tough situation. Whether you’re trying to protect your credit, avoid legal trouble, or simply regain control of a vehicle you helped finance, we’ve got you covered.

What Does It Mean to Be a Cosigner on a Car Loan?

Before we dive into whether a cosigner can sell the car, let’s make sure we’re on the same page about what cosigning actually means. When you cosign a car loan, you’re not just lending your good name—you’re legally agreeing to take full financial responsibility for the loan if the primary borrower fails to make payments. Think of it like co-signing a lease for an apartment: if your roommate bails on rent, the landlord comes after you.

Cosigner vs. Primary Borrower: Who’s in Charge?

The primary borrower is the person who applies for the loan and is listed first on the loan agreement. They’re the one driving the car, making the payments (in theory), and usually listed as the owner on the title. The cosigner, on the other hand, doesn’t typically get to drive the car or make decisions about it—but they’re equally liable for the debt.

Here’s a real-life example: Maria cosigned a $20,000 car loan for her son, Jake. Jake is the primary borrower and the one driving the car every day. But if Jake loses his job and stops making payments, the lender will come after Maria for the full amount. That’s the reality of cosigning.

Why Do People Cosign?

People cosign for all kinds of reasons—family loyalty, helping a loved one build credit, or simply wanting to support someone in need. But it’s important to go into it with your eyes wide open. According to a 2022 report by the Consumer Financial Protection Bureau (CFPB), nearly 1 in 5 cosigners end up making payments on a loan they didn’t originally expect to pay. That’s a startling statistic, and it highlights why understanding your rights—including whether you can sell the car—is so critical.

Who Owns the Car: Cosigner or Borrower?

This is where things get tricky. Ownership and financial responsibility are not always the same thing. Just because you’re on the loan doesn’t mean you own the car—and that distinction is key when it comes to selling it.

Understanding Car Titles and Ownership

In most states, the person listed on the car’s title is the legal owner. That’s usually the primary borrower, not the cosigner. So even though you’re paying the loan (or might have to), you don’t have the legal right to sell the car unless your name is also on the title.

For example, let’s say you cosigned for your sister’s Honda Civic. Her name is on the title, and she’s the one driving it. You’re on the loan, but not the title. In this case, you cannot legally sell the car—even if you’re the one making the payments. Only the person listed on the title can transfer ownership.

What If Both Names Are on the Title?

There’s one important exception: if both the cosigner and the primary borrower are listed on the title (often as “joint owners” or “and” owners, like “John Smith and Jane Doe”), then both parties have equal rights to the vehicle. In that case, yes, the cosigner can sell the car—but only with the borrower’s consent, or through legal channels if there’s a dispute.

Let’s say you and your brother both signed the loan and are listed on the title. If he stops paying and you want to sell the car to recoup your losses, you have the legal right to do so—but you’ll likely need to involve the lender and possibly a lawyer to navigate the process smoothly.

Can the Cosigner Sell the Car If They’re Not on the Title?

This is the million-dollar question: Can the cosigner sell the car if their name isn’t on the title? The short answer is: No—not legally.

Even if you’re the one making payments, if your name isn’t on the title, you don’t have the legal authority to sell the vehicle. Selling a car requires transferring ownership, and only the person(s) listed on the title can do that. Attempting to sell a car you don’t legally own could result in serious legal consequences, including accusations of fraud or theft.

What Can You Do If You’re Stuck Paying the Loan?

So what’s a cosigner to do if they’re stuck making payments on a car they can’t sell? Here are a few practical steps:

• Talk to the primary borrower. Have an honest conversation. Maybe they’re unaware of the financial strain you’re under. Suggest refinancing the loan in their name only, or trading in the car for something more affordable.
• Contact the lender. Some lenders offer cosigner release programs if the primary borrower has made a certain number of on-time payments. This could remove you from the loan entirely.
• Consider legal action. If the borrower is refusing to cooperate and you’re being financially harmed, you may need to consult a lawyer. In extreme cases, you could sue for reimbursement or seek a court order to force a sale.

One real-world example: David cosigned for his daughter’s SUV. After she lost her job, he started making payments but couldn’t afford it long-term. He reached out to the lender and discovered they offered a cosigner release after 12 consecutive on-time payments. Once his daughter got back on her feet and made 12 payments, David was officially off the hook.

When Can a Cosigner Legally Sell the Car?

Now for the good news: there are situations where a cosigner can legally sell the car. But it’s not as simple as just putting up a “For Sale” sign. Let’s break down the scenarios where selling is possible.

Scenario 1: Cosigner Is Also on the Title

If your name is on the car title—either as a joint owner or co-owner—you have the legal right to sell the vehicle. However, you’ll still need to follow proper procedures:

• Notify the primary borrower (if different from you).
• Pay off the remaining loan balance (or arrange for the buyer to pay it directly to the lender).
• Complete a title transfer with the DMV.
• Cancel insurance and registration.

For example, if you and your spouse cosigned and are both on the title, you can sell the car together—even if one of you is no longer driving it. But if only one of you wants to sell, you may need to come to an agreement or go through mediation.

Scenario 2: The Loan Is Paid Off

If the car loan has been fully paid off, the title is typically issued in the name(s) of the owner(s). If the cosigner is on the title, they can sell the car freely—just like any other vehicle owner. This is one of the cleanest situations for a cosigner looking to exit the arrangement.

Scenario 3: Court Order or Legal Agreement

In rare cases, a cosigner may be able to sell the car through a court order—especially if the primary borrower is uncooperative and the cosigner is suffering financial harm. This usually involves filing a lawsuit for reimbursement or seeking a partition action (a legal process to force the sale of jointly owned property).

For instance, a cosigner in California successfully sued their nephew after he refused to make payments and blocked attempts to sell the car. The court ruled in favor of the cosigner and ordered the car to be sold, with proceeds going first to pay off the loan and then to reimburse the cosigner for payments made.

Steps to Take If You Want to Sell the Car as a Cosigner

If you’re a cosigner and want to sell the car, here’s a step-by-step guide to help you navigate the process safely and legally.

Step 1: Check the Title and Loan Agreement

Start by reviewing the car title and loan documents. Are you listed on the title? Is the loan still active? This will determine your next steps. If you’re not on the title, your options are limited—but not hopeless.

Step 2: Communicate with the Primary Borrower

Have a calm, honest conversation. Explain your financial situation and why selling the car might be necessary. Propose solutions like refinancing, trading in the vehicle, or splitting the sale proceeds.

Step 3: Contact the Lender

Reach out to the loan servicer. Ask about:

• Cosigner release options
• Payoff amount
• Whether the loan can be assumed by a buyer

Some lenders allow a buyer to take over the loan, which could make the sale smoother.

Step 4: Get the Car Appraised

Use tools like Kelley Blue Book or Edmunds to determine the car’s fair market value. This will help you set a realistic price and ensure you’re not selling at a loss—especially if you’re trying to recoup payments you’ve already made.

Step 5: Pay Off the Loan (If Possible)

If you’re able to pay off the remaining balance, you’ll receive a lien release from the lender. This clears the way for a clean title transfer. If you can’t pay it off, you’ll need to arrange for the buyer to pay the lender directly at the time of sale.

Step 6: Complete the Sale and Transfer the Title

Once the loan is paid, sign over the title to the buyer. Make sure to:

• Fill out the odometer disclosure
• Sign in the presence of a notary (if required by your state)
• Provide a bill of sale
• Notify the DMV of the transfer

After the sale, cancel your insurance policy and keep records of the transaction for your files.

Risks and Consequences of Selling Without Proper Authority

It’s tempting to just sell the car and walk away—especially if you’re drowning in payments. But selling a car you don’t legally own is a risky move that can backfire in major ways.

Legal Repercussions

If you sell a car that’s not in your name, you could be accused of:

• Fraud
• Theft
• Conversion (wrongfully taking someone else’s property)

Even if your intentions are good, the law sees it as a serious offense. You could face fines, lawsuits, or even criminal charges.

Damage to Relationships

Beyond the legal risks, selling a family member’s car without permission can destroy trust and relationships. It’s not worth losing a relationship over a car—no matter how much money you’re losing.

Credit and Financial Impact

If the primary borrower finds out and reports the sale as unauthorized, it could trigger a default on the loan. That means both of your credit scores could take a hit. And if the new owner doesn’t make payments, the lender will still come after both of you.

One cautionary tale: A cosigner in Texas sold her niece’s car after months of missed payments. The niece reported it as stolen, and the police got involved. The cosigner was arrested, her credit was ruined, and she ended up owing legal fees on top of the loan. It was a nightmare that could have been avoided with better communication and legal advice.

Data Table: Cosigner Rights by Ownership Status

Ownership Status	Can Cosigner Sell the Car?	Required Steps	Risks
Cosigner NOT on title	No	Must get borrower’s consent or court order	Legal action, fraud accusations
Cosigner IS on title (joint owner)	Yes, with borrower’s consent	Pay off loan, transfer title, notify DMV	Disputes with co-owner, loan default if not handled properly
Loan is paid off, cosigner on title	Yes	Complete title transfer, cancel insurance	Minimal, if done correctly
Cosigner not on title, loan active	No	Negotiate with borrower, seek cosigner release	Financial loss, credit damage

Final Thoughts: Protect Yourself Before You Cosign

So, can the cosigner sell the car? The answer depends entirely on ownership, loan status, and cooperation between the parties involved. If you’re on the title, you have more rights—but you still need to follow the rules. If you’re not on the title, your options are limited, and selling without permission is a dangerous gamble.

The best advice? Think twice before cosigning. It’s not just a favor—it’s a legal and financial commitment that can affect your credit, your savings, and your peace of mind. If you do decide to cosign, make sure both names are on the title, set clear expectations with the borrower, and keep copies of all documents.

And if you’re already in a tough spot? Don’t panic. Reach out to the lender, talk to the borrower, and consider consulting a consumer rights attorney. There are often solutions—like refinancing, cosigner release, or mediation—that can help you regain control without breaking the law or destroying relationships.

At the end of the day, cars come and go, but your credit and your relationships are worth protecting. Whether you’re trying to sell a car or simply understand your rights, knowledge is power. Now you’ve got it.

Frequently Asked Questions

Can the cosigner sell the car without the primary borrower’s permission?

No, the cosigner cannot sell the car without the primary borrower’s consent, even if they are listed on the loan. The vehicle is typically titled in the primary borrower’s name, giving them legal ownership rights.

Does the cosigner have any ownership rights to the car?

Generally, the cosigner does not have ownership rights to the car unless they are also listed on the title. Their role is limited to financial responsibility for the loan, not possession or control of the vehicle.

Can the cosigner force a sale of the car if payments are behind?

The cosigner cannot unilaterally sell the car, but they may work with the lender or primary borrower to arrange a sale to repay the loan, especially if payments are delinquent.

What happens if the cosigner wants to sell the car but the borrower refuses?

If the cosigner wants to sell the car but the primary borrower refuses, legal action may be necessary. However, without title ownership, the cosigner has limited options and should consult a legal professional.

Can the cosigner sell the car after paying off the loan?

Only if the cosigner is also listed on the vehicle title can they sell the car after the loan is paid off. Otherwise, the primary borrower retains full ownership and selling rights.

Is it legal for a cosigner to repossess and sell the car?

No, a cosigner cannot legally repossess or sell the car unless they are the titled owner or have a court order. Repossession rights belong to the lender, not the cosigner.