How to Remove a Guarantor

A guarantor, or co-signer, is an individual who assumes financial responsibility for a loan if the borrower defaults. In some cases, a borrower or her guarantor may no longer want or need a co-signer. By checking the terms of your loan and speaking with your lending institution and guarantor, you may be able to remove the guarantor.

Part 1

Part 1 of 2:

Withdrawing a Guarantor

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1
Speak with your guarantor. Talk to your guarantor about why you would like to remove her or why she no longer wants to act as your co-signer. This can clear up any problems and may prevent you from having to remove your guarantor and go through the process of renewing your loan.
- In some cases, you may not be able to speak to your co-signer because of death or divorce. In these cases, you may need to speak to your and the individual’s lawyer.
- In the case of the death of a guarantor, many institutions will call the co-signed loan and collect from estate of the guarantor if equitable security cannot be obtained by the borrower.
- Your guarantor may have a legitimate reason for wanting off of the loan, such as she is buying a house and doesn’t want this tied to her credit.^{[1]XResearch source}
- If you have some type of personal issue with the guarantor, this may not be enough of a justification to remove her as co-signer.
- Your guarantor should also have a copy of the loan terms and you may want to call her attention to the clauses on guarantors for her information.
2
Review the terms of your loan. Every loan comes with paperwork that details the terms of the loan, including contingencies related to a guarantor. Knowing the details related to guarantors on your loan can help you not only understand what you require to remove a guarantor, but also if it is even possible.
- Be aware that many lenders will not allow you to remove guarantors, except in cases of death or possibly divorce.
- In the case of divorce, both parties typically remain liable unless there is a court order.
- In cases where you may remove and/ or replace a co-signer, there may be additional fees or you may even need to sign a new contract, which could change the terms of your original loan.
- Call your lender if you have any questions.
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3
Schedule a meeting with your lender. If you decide to proceed with removing your guarantor, schedule a meeting with your lender. This can help you explain the reasons for why you want to remove the lender as well as discuss what options you have in altering the loan terms.
- You can also schedule time to speak to your lender over the phone if meeting with the organization in person isn’t possible.
- Make sure to schedule the meeting as soon as possible, possibly before your next payment is due.
- Be honest with your lender. This may help open up different options for removing the co-signer.
4
Explore your options. Discuss with your lender all of the options available to you to remove or replace your guarantor. Knowing what possibilities you have may save you money, headaches, and possibly your relationship with your guarantor. Some of the options you may have include:
- Removing a guarantor altogether.
- Replacing the guarantor.
- Paying off the loan or refinancing it.
- It's also possible that you will not have the option to change the terms of the loan or remove the guarantor.
5
Make the best decision for you and the guarantor. Once you’ve had a chance to review your options with your lender and guarantor, make a decision on how to proceed. Make sure that whatever decision you render is in the best interest of you and the guarantor.
- Because the relationship of guarantor-borrower is often personal, you’ll want to make sure that any terms are not to the detriment of either party, which could have a significant impact on personal ties.
- In some cases, you may have to involve a lawyer, especially in cases of death or the demise of a personal or business partnership.
- Be aware that in most cases, the guarantor is legally committed to remain co-signer no matter her personal preferences.^{[2]XResearch source} She should have contemplated such contingencies before agreeing to act as your guarantor.
6
Renegotiate the terms of your loan. If your lender allows you to remove the guarantor from your loan, you may have or want to renegotiate the terms. This may help you get better rates or remove the necessity for a guarantor altogether.
- Be aware that a bank will not allow a past-due or defaulted account to remove a guarantor. In this case, you will have to replace the guarantor you removed with someone else.
- The bank may reassess your need for a guarantor based on successful payments of the loan and proof that you have improved your credit score and are able to continue making regular payments. In turn, this may give you a more beneficial interest rate or even loan terms.
- If you are able to replace the guarantor, the lender will need information for a new guarantor before it can renegotiate the terms of your loan.

Part 2

Part 2 of 2:

Replacing a Guarantor

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1
Identify potential co-signers. If you are able and need to replace a guarantor on a loan, you will need to designate a new guarantor for the loan. Identify several potential persons or organizations that could act as a guarantor for your loan. This can help ensure that you have a viable replacement in the event that someone doesn’t agree to act as your co-signer.
- You can ask close friends, family members, or employers to act as your guarantor. Make sure to only ask persons who are close to you and know you are asking in good faith.
- Be honest with any person or organization you ask about why you need a guarantor. This could help you secure a co-signer and demonstrate a request made in good faith.
- Be understanding if an individual or organization cannot act as your guarantor. This is a significant responsibility that may leave them with a considerable burden in the event your default.
2
Check financial viability of your guarantor. A potential guarantor needs to have good credit in order replace your current co-signer. Checking the financial viability of the person you asked to act as your guarantor can help you avoid problems or delays when you renegotiate loan terms with your lender.
- You can ask your guarantor about their financial health, which may be enough information.
- If you want to be absolutely sure you can avoid problems replacing the proposed guarantor with your lender, ask them to provide you a copy of her credit report from the three primary credit reporting agencies. The bank will request this information in any case.
- You may not need to ask an organization for its credit information, though the lender will also require information about it as well as a contact person, such as the Chief Financial Officer or your boss.
3
Present the new guarantor to your lender. You will need to give your lender information regarding the person or organization you have designated as the replacement guarantor. Make sure to have all relevant financial information for your co-signer to avoid delays to approval. Your guarantor may need the following forms of identification or financial information:
- Credit report(s)
- Employment and salary information
- Proof of ability to pay
- Personal identification including age
- Proof of residence or citizenship.^{[3]XResearch source}
4
Await your lender’s decision. Your lender will need to approve your proposed guarantor in order to add her name to your loan. Wait for the response from your lender before making any plans.
- It may take your lender up to a week to make a decision on the viability of your proposed guarantor. For example, the lender may run credit reports or contact your co-signer’s employer during this time.
- If your lender doesn’t approve your guarantor, present another one of your options for co-signing the loan.
5
Sign your loan. Once your lender approves the renegotiated loan terms and your replacement guarantor, you will need to sign the necessary paperwork. Make sure your guarantor is present, as she will also need to sign the documents.
- You may need to schedule an appointment with your lender to sign the new loan. Make sure your appointment is at a time that both you and your guarantor can attend.
- Some lenders may not issue the loan or refinance until they have the physical signature of your co-signer.
- Make sure that you and your guarantor read the terms of the loan very carefully before signing. If you have any questions or concerns, ask your lender to clarify them.
- Be aware that your guarantor may not agree to act based on the terms of the loan, which represents a considerable risk for her and her credit.
Once you’ve signed the loan, make sure you and your guarantor have copies of the loan agreement. This can help clarify any questions or issues that may come up between in the life of the loan.
7
Pay loan installments regularly. It’s important to make regular and timely payments on your loan. This can help improve your credit score and may help you get better loan terms on your current or future loans.
- If you are unable to make a payment, call your lender and speak to someone about the issue. In many cases, lenders are willing to work with a person if they’ve make regular payments and agree to make installments towards any overdue amount.

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If the guarantor allowed the property (i.e. a car) to be repossessed, the lender can file a Repossession Certificate against them and put you on a new loan. First, you must get the property back by paying the appropriate fees, etc. You may need to get another co-signer to be guarantor. A re-titling fee would apply. Contact your lender or the DMV and ask about this specifically.
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