Cosigners do not have any ownership rights or claims in the vehicle being financed. Even if you are making payments for the car as a cosigner, you are unable to take any action in terms of taking ownership of the vehicle. Sadly, if your name isn’t on the vehicles state title, there is no way you can claim ownership of the vehicle.
If you’re trying to get a car loan with less than ideal credit, a cosigner may be the right choice for you. Essentially, a cosigner lets the main borrower “use” their credit to help them get approved for a line of credit, such as an auto loan. As a cosigner, you bear all the credit risk the borrower does without too many benefits.
If the main borrower fails to make timely payments, the lender has the legal right to collect the money from you. This can be detrimental to your credit score, so be wary anytime somebody asks you to cosign for a loan. If the borrower is serious about making their payments on time, then you will see a boost in your credit score.
What Happens Next
If the person you cosigned for ends up becoming delinquent on their payments, you have legally agreed to make payments on their behalf. Having a clear channel of communication with the main borrower is a great way to ensure payments are made on time. Getting a car loan without a cosigner can be difficult for many, so if a family member or close friend needs a cosigner, be sure to weigh the pros and cons.
If for some reason the main borrower is unable to make on-time payments, you can expect a few calls and letters from your lender. If a borrower is delinquent and you as a cosigner refuse to pay, the lender can and most likely will take legal action. If the vehicle gets repossessed, you will see a massive drop in your credit score of more than 100 points.
If the lender does end up repossessing the vehicle, as a cosigner you do have certain rights. You will have the right to receive certain notices in the mail telling you what stage in the repossession process you are in. You will be able to know when the car is headed to auction and what price the car sells for. If the car sells for less than the loan amount, you could be liable for the difference.
All in all, becoming a cosigner is a great way to help somebody get the car loan that they need. Although if the main borrower is delinquent, you could be facing a credit situation that will prevent you from getting a car loan as well. This is where CrediReady can help.
Our nationwide network of trusted lenders and verified dealers will work with buyers in all credit situations. Take a moment to fill out our free no-obligation loan inquiry form today to get started!