What can happen to a co-signer’s credit if the car is returned to the finance company?
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What can happen to a co-signer’s credit if the car is returned to the finance company?
My wife co-signed on an auto loan for our son and then he quit his job. Now we are having to pay for this car that we only have had for about 2 months. The loan company says that if we return the car that they will not turn this over on our credit. We are still paying on the initial down payment in which they financed. How can we insure that it is not turned over on her credit?
Asked on August 16, 2011 South Carolina
Answers:
FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney
Answered 13 years ago | Contributor
If the lender on the car loan claims that returning your son's car that your wife co-signed for your son which he now cannot make the payments on will not be turned over to a credit reporting agency concerning your credit, it needs to be stated in writing from it before you even consider returning the vehicle.
Your bigger problem is what will happen if you return the car as far as the loan. Will the loan be retired? Will the car be sold and your wife and son be responsible for a deficiency judgment if the car is sold for less than what is owed on the loan? Will your son's credit be negatively impacted by the car's return.
You should consult with a business attorney about this situation before the car is returned and any agreements are made between you and the lender.
Good luck.
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