If You Cosign A Car Loan And The Person Dies
Even if you were in good standing before the co signer s death the lender can declare the loan in default if you don t pay the entire balance.
If you cosign a car loan and the person dies. 6 an unsecured loan on the other hand has no collateral. There are contexts in which the car loan may pass to someone else but more often the car loan will be settled out of your estate or it will go unpaid. The automatic or auto default clause can impact the borrower directly if the co signer dies.
It may be the bank is right and the borrower really can t pay off the loan in which case cosigning might be a big mistake. Such a clause gives the lender the right to demand full repayment immediately upon the death of a co signer. If payments on a secured car loan stop for any reason including the death of the person who signed the agreement the lender can repossess the car and sell it to cover the unpaid portion of the loan.
If you agree to co sign a car loan you re taking on responsibility for the loan should the primary borrower default or die. The co signer would want to be sure to keep up with the payments so as not. Regardless if the primary person on the car loan dies then full responsibility would automatically go to the co signer.
In effect you re allowing the primary borrower to receive a loan because you have good credit and the other individual s credit isn t sufficient for the purpose. Protecting yourself if you co sign. Also any time you jointly own debt i e you cosigned a loan you re expected to continue paying if the other person passes away.
But if the cosigner dies and you later default you re still fully responsible for the loan just as you would be if you still had a cosigner and your credit score takes a hit. If the person for whom you co signed dies the liability for the loan falls to you. Responsibility of the cosigner on an auto loan when you take on a car loan it s important you know what the cosigner s role is.
First the person asking you to co sign a loan should give you a copy of their credit report so you can see why they have bad credit. If you do decide to co sign a loan for a friend or family member there are a few things you must do to protect your credit record and avoid having to pay for the loan yourself. You can ask for debt you cosigned to be forgiven but don.
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