Refinancing to remove co-signer

[joshk716]

Long story short, my sister needed a new vehicle in 11/18 so my now wife co-signed for her to get a decent rate and help her build credit. Since that time, I have personally added my sister as an authorized user onto my largest CL credit card so her score went from a 580 to a 770. We are looking to purchase a home soon and wanted to get my wife off the contract so I told my sister she should refinance on her own so its simply her loan. Is this a difficult process and what would be her chances of being approved? Her gross income is about $36k now and works full time, nothing negative on her credit. We are thinking of going with Navy Fed since they offer a $200 bonus to refinance and have competitive rates.

[Harvey26]

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@joshk716 wrote:

Long story short, my sister needed a new vehicle in 11/18 so my now wife co-signed for her to get a decent rate and help her build credit. Since that time, I have personally added my sister as an authorized user onto my largest CL credit card so her score went from a 580 to a 770. We are looking to purchase a home soon and wanted to get my wife off the contract so I told my sister she should refinance on her own so its simply her loan. Is this a difficult process and what would be her chances of being approved? Her gross income is about $36k now and works full time, nothing negative on her credit. We are thinking of going with Navy Fed since they offer a $200 bonus to refinance and have competitive rates.

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It a pretty easy process. She would need to just apply for the refi and once approved they would pay off the joint loan and she would just have the new current sole loan. 

[joshk716]

Perfect. Based off the information above, do you think she would have any problems getting approved on her own? Any other CU or banks you recommend? She owes about 5800 on her car and the NADA is around 6200.

[Harvey26]

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@joshk716 wrote:

Perfect. Based off the information above, do you think she would have any problems getting approved on her own? Any other CU or banks you recommend? She owes about 5800 on her car and the NADA is around 6200.

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I dont believe she will have any issue with this. Who is the loan currently with? Maybe she can refi through current lender. 

[joshk716]

She is currently with M&T Bank and they won't allow her to refinance until she has had the loan with them for 48 months, which is ridiculous because by that time, she would have about a year left on the loan anyways. Apparently not all loans they do include the 48 month clause but hers did due to credit at the time. Just a way for them to make guaranteed interest, even though the rate is 7.99%

[Harvey26]

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@joshk716 wrote:

She is currently with M&T Bank and they won't allow her to refinance until she has had the loan with them for 48 months, which is ridiculous because by that time, she would have about a year left on the loan anyways. Apparently not all loans they do include the 48 month clause but hers did due to credit at the time. Just a way for them to make guaranteed interest, even though the rate is 7.99%

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Yeah I would refi that loan. I am pretty sure she could cut that rate in half and continue paying same note and pay it off just as quick. You guys set her up great!

[joshk716]

Thanks! We're going to call tomorrow and get her all set up. Appreciate the guidance on everything.

[Harvey26]

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@joshk716 wrote:

Thanks! We're going to call tomorrow and get her all set up. Appreciate the guidance on everything.

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Great! Let us know the outcome of everything!

[joshk716]

Finally got a chance to call NFCU and they were able to approve her indepedently for 48 months at 12.99%, her payment would jump from $133 to $156. Over those 48 months she will pay about $600 more in interest than she would on our co-signed loan but unfortunately we don't see any other options as we are trying to prep our credit for buying a home in the summer. LendingTree offers were 18% so maybe the 12.99% isn't bad. Just shocked as her FICO Auto is 754 as per the NF rep.

[Anonymous]

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@joshk716 wrote:

Finally got a chance to call NFCU and they were able to approve her indepedently for 48 months at 12.99%, her payment would jump from $133 to $156. Over those 48 months she will pay about $600 more in interest than she would on our co-signed loan but unfortunately we don't see any other options as we are trying to prep our credit for buying a home in the summer. LendingTree offers were 18% so maybe the 12.99% isn't bad. Just shocked as her FICO Auto is 754 as per the NF rep.

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That is not a bad rate, especially if your sis does not really have any credit or previous auto loans.

She always can pay more if/when possible to save on interest.

And also further down the road, she can try to refi again.