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Vehicle Ownership 101: Co-Owning vs. Co-Signing a Car

Vehicle Ownership 101: Co-Owning vs. Co-Signing a Car

Looking to buy a car but don't have the funds or credit score to do it alone? Two options may come to mind: co-owning and co-signing. While these terms sound similar, there are significant differences between them that you should know before jumping into any agreements with friends or family members! Let's explore the pros and cons of each option so that you can make an informed decision about your next ride. Get ready for some valuable insights on co-owning vs. co-signing a car!

What is Vehicle Ownership?

There are a few things to consider when purchasing a car with another person. Should you be the sole owner of the vehicle? Or, is it better to have someone co-own the car with you? There are benefits and drawbacks to both methods of vehicle ownership. Here we will discuss what it means to co-own or co-sign a car and the pros and cons of each method.

When two people purchase a car together, they can either co-own or co-sign the vehicle. If they choose to co-own the car, both parties are equally responsible for any debts associated with the vehicle. This includes loan payments, insurance, gas, and maintenance costs. Both owners also have an equal say in how the vehicle is used and can sell or trade their portion of ownership at any time without consulting the other owner.

If two people choose to co-sign on a vehicle, only one person is responsible for owning and making payments on the car. The other person who co-signed is only responsible for making payments if the primary owner cannot do so. Co-signing does not give that person any rights to the vehicle itself. For example, they cannot decide how it is used or when it is sold.

Understanding Co-Ownership vs. Co-Signing a Car

Understanding Co-Ownership vs. Co-Signing a Car

FIrst, is a co-signer a co-owner? There is an important distinction between co-owning and co-signing a car. Both involve two people, but their rights and responsibilities differ.

  • Co-ownership: Both owners have an equal stake in the vehicle and are responsible for all its debts. If the vehicle is sold, both owners must sign off on the sale.
  • Co-signing: The primary owner is responsible for the debt, but the co-signer on a car or other vehicle agrees to be liable if the primary owner doesn't make payments. The co-signer does not have any ownership rights in the vehicle, so you never have to question, can a co-signer take your car, because the answer is no.

Pros and Cons of Co-Ownership and Co-Signing

There are a few key things to consider when deciding whether co-ownership or co-signing is the right option for you and your vehicle. Here are some pros and cons to help you make your decision:

Co-Ownership Pros:

  • You will have an equal say in all decisions regarding the car, such as repairs, modifications, and selling.
  • You will be equally responsible for making payments on the car loan, so if one person defaults, the other is still on the hook.
  • If you choose to sell the car, you will both receive an equal share of the proceeds.

Co-Ownership Cons:

  • You may not be able to get financing on your own if your credit is not good enough, so you would need a co-signer anyway.
  • You are equally responsible for any damage to the car, even if it was not your fault.
  • It can be difficult to agree if one person wants to sell the car and the other doesn't.

Co-Signing Pros:

  • The primary borrower will be solely responsible for making payments on the loan, so you will not be affected if they default.
  • You may be able to negotiate a lower interest rate since you are lowering the risk for the lender by co-signing.
  • You can usually withdraw your name from the loan anytime without affecting the primary borrower.

Co-Signing Cons:

  • Your credit score could be negatively affected if the primary borrower fails to make timely payments or defaults.
  • You will still be responsible for any late payments or collection fees that may arise due to missed payments by the primary borrower.
  • You may not get any benefit from co-signing if the primary borrower sells the car before you can withdraw your name from the loan.

Who Should Co-Own or Co-Sign a Vehicle?

If you are considering adding someone to your vehicle's title or loan, it is important to understand the difference between co-ownership and co-signing. Both arrangements have pros and cons that you should consider before deciding.


When two or more people own a car together, they are co-owners, and it's important to know co-buyer rights to vehicles. Each person has an equal claim to the vehicle and can use it as they please. Co-owners are also responsible for making loan payments and maintaining insurance coverage.

If one co-owner wants to sell the car, the other owner must agree to the sale. This can be difficult if there is a disagreement about what to do with the car. Co-ownership also means that the other person's payment history affects each person's credit score.


When one person co-signs a loan for another person, they are not listed as an owner of the vehicle. The co-signer agrees to take over the responsibility of repaying the loan should that primary borrower fail to make their agreed payments. The co-signer has no legal claim to the vehicle and cannot use it unless permitted by the primary borrower. And if you're wondering, is a co-signer on the title of a vehicle and does a co-signer own the car? They're not on the title, they're only on the loan, and they most certainly do not own the vehicle.

Co-signing a loan can be helpful for someone who has bad credit or no credit history. It can also be helpful for someone who wants to buy a car but does not have enough money for a down payment. However, co-signing comes with risks.

Legal Considerations for Both
Co-Ownership and Co-Signing Agreements

Legal Considerations for Both
Co-Ownership and Co-Signing Agreements

There are many legal considerations to consider when co-owning or co-signing a vehicle. Both co-owners and co-signers have certain rights and responsibilities regarding the vehicle. As a co-owner, you have the right to use the vehicle as you please and to make any changes or modifications to it that you see fit. You are also responsible for paying your share of the vehicle's costs, including insurance, registration, and maintenance. You may be held liable if the other co-owner does not pay their share. As a co-signer, you can insist that the primary owner makes timely payments on the car loan and insurance premiums. If they fail to do so, you may be held responsible for those payments. You are also entitled to a refund of any money you have paid towards the loan if the primary owner defaults on it.

How to Choose the Right Option for Your Situation

If you want to buy a car with someone else, you have two main options: co-owning or co-signing. Both have pros and cons, so it's important to weigh your options carefully before deciding.

Co-owning a car means that you and the other person are both equally responsible for the vehicle. This can be a good option if you buy the car with someone you trust, like a family member or close friend. You'll each have an equal say in how the car is used and maintained, and you'll both be on the hook financially if something goes wrong.

Co-signing a car means that you're essentially lending your creditworthiness to the other person. They'll be the primary owner of the vehicle, but your name will also be on the loan. This can be a good option if you're buying a car for someone who doesn't have good credit, but it comes with some risks. If they miss payments or default on the loan, your credit will take a hit. And because you're not the primary owner, you may have less control over how the car is used and maintained.

Ultimately, there's no right or wrong answer when it comes to choosing between co-owning and co-signing a car. It all depends on your individual circumstances and

Resources to Help with Vehicle Ownership Decisions

There are a number of resources available to help with vehicle ownership decisions, including the following:

  • Vehicle ownership calculators: There are a number of online calculators that can help you compare the costs of different vehicle ownership options.
  • Car buying guides: These can be found online and, in many cases, offer specific advice on how to save money when purchasing a car.
  • Vehicle depreciation charts: These can be helpful in understanding how quickly a vehicle will lose value over time.
  • Auto loan calculators: These tools can help you compare different financing options and calculate monthly payments.
  • Personal finance books and websites: There are many books and websites available that offer general advice on personal finance, including how to save money on vehicle ownership costs.

Car co-ownership and car co-signing are two options that many people face when trying to purchase a vehicle. Both come with their own set of pros and cons, so it is important to carefully consider which option is right for you before making any decisions. As long as you understand the legal requirements, risks, and benefits associated with both ownership structures beforehand, GoodCar, believes you can make an informed decision that best fits your needs.