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My mom cosigned on a car loan for my nephew and he has not made a payment in, gee, 7 months. If my mom asks them to repossess the car, will she be required to pay any of the remaining loan?

7 Comments »

1. 

   It depends on what the car is worth and how much the bank can get for it if they repossess it. As the cosigner, your mother is responsible for the entire balance of the loan. If they repossess the car and can’t sell it for the amount that is due on the loan, plus all the fees for repossessing it, she will still end up owing the difference.

   The bank doesn’t really want the car, they want her to pay. So offering the car back doesn’t help them.

   A better solution is to use whatever leverage she has over her nephew to get him to pay. If the payments don’t get made not only can the car be repossessed but its on her credit as well. If she has to, to protect her own credit, she should make the payments then take them out of his hide, if necessary.

   The lesson for your mom (and you) is to never cosign a loan unless you are prepared to pay for whatever is being borrowed. The reason the bank want a cosigner is they know the person taking out the loan is risky. Since they are in the business of assessing credit risk you should take that as a serious warning not to cosign.

   I won’t cosign for anyone but my spouse and own kids. With my own kids I’m prepared to make payments and take back the car if necessary. Another lesson, never loan money to family that you wouldn’t give them as a gift. It always ends up badly.

   Good luck!

   Comment by CBrez — September 8, 2010 @ 4:14 pm

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   Comment by Nally — September 8, 2010 @ 4:14 pm

3. 

   She is responsible for the full balance remaining on the loan. A repo will not change that.

   Comment by jlf — September 8, 2010 @ 4:14 pm

4. 

   As a cosigner your mother is responsible for the loan balance on the car. The car will be repossessed. It will then be sold at an auction. Once sold, she will be responsible for the difference of what it was sold for and the balance on the loan plus any fee’s.
   If the balance goes unpaid; she and your nephew will be sued. There will be a judgment against them and their paychecks will be garnished .Also, her credit will take a hard hit.

   Comment by sarahsmile90 — September 8, 2010 @ 4:14 pm

5. 

   Yes. Plus the repo fee. NEVER cosign for ANYONE!!

   Comment by bearr41 — September 8, 2010 @ 4:14 pm

6. 

   Your damn skippy. Your mom will have a repo on her credit report, and the difference between the selling costs, the amount of the loan, and the selling price will be what she’ll owe to the bank.

   If she is unable to pay the balance of what’s owed after the bank auctions off the car, then the bank has the option of taking her to court to get a judgment. From their, they can freeze her bank account or garnish her wages.

   Never cosign for an idiot.

   Comment by The Dude — September 8, 2010 @ 4:14 pm

7. 

   If they sell the car for less than what is owed on the loan, your mom will be responsible for the difference. Never loan money to friends or family or cosign for a loan unless you’re willing to lose all your money.

   Comment by David M — September 8, 2010 @ 4:14 pm

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