CO-SIGNER CONSEQUENCE
I co-signed for a car loan for my sister last year and lately she has not been making her payments on time. I have the feeling that she does not have the money to make the payment from July 8 which will be 30 days overdue today. Her August payment is now due as well. If I have to start making the payments, what right do I have to the car? I don’t want this to affect my credit but my sister and I are at odds right now. I know that it doesn’t matter to her what it will do to my good credit if she does not keep the payments up. Any advice would be appreciated!!
Thank you!
(Unsigned)
Unsigned,
Co-signers usually have little to cheer about. You can check the original agreement but might find that the agreement clearly defines your obligation but not your rights to the vehicle if your sister defaults. The lender might not want to provide default contingencies solely to avoid complications, but may be required by regulation – check to be sure.
In any case, you can make an offer to “lend” your sister the payments, thereby creating a loan separate from the original co-signer agreement. If you are in a position to payoff the vehicle and become the lien holder, you then would have lien holder “rights.” You could also offer to “buy” the vehicle and save her the mark on her credit.
If your sister refuses your offer(s) and you don’t want to make payments, consider making none or whatever brotherly love allows. Let’s assume there are 30 payments left. Will your sister resume payments after 2 or 3 months or allow you to make all the remaining payments? Money is one thing sisters are another. You have to weigh both issues.
I don’t know if there will be any greater impact on your credit if the car is repossessed owing 30 payments or 25. It comes down to - do your take the hit now, later, or rise above the emotions and work out a financial agreement that will benefit both of you in the long run. I believe vehicle repossession stays on your credit report for 7 years. I don’t of any special treatment for cosigners.
If emotions are running high, have your sister write to me, perhaps I can buffer the emotional component.
Everybody’s Uncle
