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Advice Team Responses
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Loans: Cosigned Loans |
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I am considering cosigning an auto loan for my 21-year-old son. He has agreed to make timely payments, but I would like the right to “repossess” the car if he fails to do so. How can I make this happen? -David |
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David,
Cosigning and ownership are two separate issues. If you cosign a loan for a vehicle and your name is not on the title, you are not necessarily entitled to its ownership. This is true even if you are the one making payments.
You might consider purchasing the car and making the payments yourself. Then, you could allow your son to use the car as long as he makes timely payments to you. (Check with your insurance company to make sure you have the proper coverage for this set-up.)
If your goal was to help him establish good credit, he could more easily achieve this by obtaining a secured credit card.
The Advice Team |
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I need to find out about cosigning on a vehicle and what responsibilities come with it. We are going to buy a truck and the finance company wants us to have a cosigner because we do not have three years’ tax returns. My brother has agreed to cosign. Before we commit, I was wondering what liabilities would fall on him. -Steve |
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Steve,
I applaud your concern for your brother’s financial well-being. Cosigning a loan is a huge responsibility that carries a lot of risk. Basically, a cosigner is responsible for the debt. That means if you do not pay the debt as agreed, for any reason, the creditor will hold your brother responsible. You should not assume that the lender will pursue collecting from you. In most cases, collectors will seek payment from the person who offers the best chance of recovering the money. If you do not pay, your brother could be sued.
Knowing all of this, if you value your relationship with your brother, it may make more sense to wait until you can qualify on your own.
Good luck to you both,
The Advice Team |
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I recently cosigned for a car loan for a friend. This "friend" has duped me and she won't pay. My question is: how can I get my name removed from the loan? I don't want to pay for a car for her. Her name is on the title and she has a car free of charge! I have learned my lesson; I just want to know what can be done—before my credit is ruined. -Mark |
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Mark,
Helping someone obtain their goals can be very rewarding; however, far too many friendships end when money is involved. Unfortunately, there is no simple way to “remove” your name from a cosigned loan. In order for the primary borrower to assume total responsibly for the debt, they would have to apply for a new loan and qualify on their own. (I am assuming that this is not possible or you wouldn’t have been asked to cosign in the first place.) Any late payments made by your “friend” will appear on your credit report. This is true even if you were unaware that late payments were being made. Your only recourse now may be to resolve the issue in court. For this, you might wish to consult with an attorney.
The Advice Team |
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