I took out a auto loan with someone a couple years back that is now deceased, When I went to register my car in my town it was denied because the title which is owned by the bank still has my co-signer's name on it, even though the car is registered under my name. I was told I will need to talk to the bank to have this sorted out, can the bank deem the old loan null and create a new one with a higher interest rate?
Loans typically have a successor clause that handles this situation. Normally, the deceased's estate is now effectively a cosigner, so no, if you are not in default, the bank cannot just cancel your loan and issue a new one without your permission. If you were to default, then the bank could go after you and the deceased's estate for the balance (after they repossess and sell the car).
The title is independent of the loan. The estate is now effectively on the title, and would have to sign their interest over to you to be taken off.
Note that much of this is state specific, but you might find a local estate attorney who could answer your questions (and maybe to a different bank to get an objective answer on the loan).