Why it matters

Cosigners remain legally responsible for a loan until a lender approves a release. That means missed payments, collections, or a default will affect both names and credit reports. Removing a cosigner protects their credit and frees them from future liability — but it requires meeting the lender’s rules or choosing an alternative (like refinancing).

When a release is commonly possible

  • Auto loans and many private student or personal loans: lenders often offer formal cosigner-release programs after a set period of on-time payments (commonly 12–36 months).
  • Private student loans: many lenders allow release after several years of good payment history, though policies vary widely.
  • Federal student loans: federal direct loans generally don’t use cosigners; parent borrowers (Parent PLUS) and federal rules are different — check studentaid.gov for specifics.

What lenders usually require

Lenders set their own criteria. Typical requirements include:

  • A consecutive on-time payment history (commonly 12–36 months).
  • Proof that the primary borrower’s income and employment support the loan (recent pay stubs, W-2s, or tax returns).
  • A credit review showing the primary borrower meets the lender’s minimum score or underwriting standards.
  • No recent delinquencies, defaults, or co-signed debts in collections.
  • Completion of a formal application or request form, and sometimes a processing fee.

Documents you may need

  • Signed cosigner-release application (from the lender)
  • Recent pay stubs or employer verification
  • Most recent W-2 or tax return
  • Bank statements showing consistent deposits
  • Photo ID for both borrower and cosigner (if requested)
  • Account history or proof of on-time payments

Step-by-step request process

  1. Read the loan contract. Look for a cosigner-release clause and any stated timeline or conditions.
  2. Call the lender’s customer service or loan‑servicing department to confirm policy and request the release form. Take note of the representative’s name and date of call. (Consumer Financial Protection Bureau notes the cosigner is liable until release is granted.) (https://www.consumerfinance.gov)
  3. Gather required documents (income, ID, payment history) and complete the lender’s form.
  4. Submit the request in writing and request written confirmation of receipt and next steps.
  5. Allow time for underwriting and credit review — expect a few weeks to a couple of months depending on the lender.
  6. If approved, get a written release and confirmation that the cosigner will be removed from future liability and that credit reporting will reflect the change.

If the lender denies the release

  • Ask for the specific reasons in writing. That helps the borrower address gaps (e.g., low credit score, insufficient income, recent late payments).
  • Consider refinancing the loan in the primary borrower’s name only. Refinancing replaces the original loan and removes the cosigner but depends on the borrower’s qualifying credit and income.
  • Improve credit factors (pay on time, reduce debt) and reapply later.

Practical tips from practice

  • In my experience helping clients, lenders often approve releases faster when borrowers provide a short cover letter explaining employment changes (raise or promotion), and include recent pay stubs and a current credit-report snapshot.
  • Keep copies of all communications. If a lender promises a release, get it in writing before the cosigner assumes the risk of stepping away.

Common misconceptions

  • “After X payments, the cosigner is automatically released.” False. A contractual release must be approved and documented by the lender.
  • “Removing the cosigner is free.” Sometimes there is a fee; sometimes not. Ask in advance.

Sample short email/request to a lender

“Hello — I’m requesting a cosigner-release review for loan account #123456. The primary borrower (name) has made on-time payments since [date] and now has stable income. Please send the cosigner-release application and a list of required documents. Thank you — [Your name, contact info].”

Credit and legal effects

A lender-approved release removes future liability, but it will not erase prior missed payments (if any) or retroactively remove earlier joint reporting. If the loan is refinanced, the old account stays on credit reports but the new loan’s account reflects the new borrower only.

Alternatives to a formal release

  • Refinance or consolidate the loan in the primary borrower’s name.
  • Pay down principal to qualify for refinancing at better terms.
  • Negotiate a modification with the lender (less common for consumer loans but possible).

Related FinHelp resources

Authoritative sources and further reading

Disclaimer

This article is educational only and not legal or personalized financial advice. For decisions about a specific loan or release request, consult your lender and consider a qualified financial adviser or attorney.