I don't really think there's anything that can be done here in terms of adverse action, but is there anything I'm not considering involving potential AA regarding an auto loan? Obviously with revolvers, creditors can slash limits, raise APR, or even close an account if they feel you've become a greater risk. What about auto loans?
I co-signed on an auto loan for someone that's only got 6-7 payments left on it. She's never missed a payment and I don't believe that she will (I watch it very closely month to month). Recently though she's gotten herself in over her head in CC debt, has recently missed a payment on a CC and her creditors are starting to take AA by slashing her limits. This got me thinking to the auto loan that I co-signed on for her and whether or not I can be impacted at all with this one account. I'm assuming so long as she continues to make on-time payments there's nothing the lender can do in terms of AA, but I want to be sure. Thanks everyone.
The only threat I have ever heard against an auto loan was an example where someone did not fulfill their obligations early in a loan.
For example with PenFed, if they do not recieve confirmation that they are listed on the lein holder within 60 days they will send out a letter threatening to jack the interest rate to the highest available. (Source:me, I live in a state with an electronic title and it can be difficult to get proof with a refinance)
I would say you should be good, but if she is in over her head it would be easy to be late or miss a payment. At least it sounds like you are almost in the clear.
They can charge whatever fees allowed in the note she (and you) signed.
If she has paid beyond the due date, there will be additional interest due on the loan so the last payment may end up being much higher than what she and you are planning.
In a situation like this, read the note again so you are familiar with the default provisions. The PenFed thing mentioned above would have been listed in the note - probably in the fine print. I can understand it because I would think any lender would want a lien on the collateral.
As far as other adverse actions - no. The loan note is what the lender is allowed to do. I will say, the more equity that the vehicle has, the more quickly lenders will repo in the case of a default (late payment). Coupled with the new negtive info on her credit report, it is much more likely that her late payments, if any, will be an issue.
As long as the payments are made on time they cannot change any terms of the loan. If she makes payments late or defaults than there are terms in the lending agreement you signed that spell out what actions they can take. Since your co-signer and the loan is almost over its probably a good idea to tell her to let you know if she cannot make the payment as its probably worth making a payment if needed to protect your credit. It sounds like she has prioritized her car payment (most do because they need their car).
Unfortunately she's an Ex of mine so we don't really speak any more than necessary. I actually don't want to bring up the auto loan, as IMO it would sort of be "poking the sleeping bear" in a way, since I don't believe she really understands my obligation to the loan as well from co-signing it. She has the loan paperwork, not I. There's only $1500 or so left on the loan. Using monitoring software I see that the loan updates on or about the 16th every month, so when it updates I always look for the balance to drop by the amount of the monthly payment. So far, there hasn't been a month where it hasn't dropped. If it doesn't drop though, I'll simply contact the lender (Honda) every day if I have to to check and see if the payment was received. If it gets too close for comfort at any point, I can make a payment. I have the money to pay off the loan in full at any point if need be, but she already sucked me dry for enough money throughout our relationship that I'm not looking to continue that pattern post-relationship if possible.
I was only concerned regarding AA because I've never heard about it with respect to an installment loan, just revolvers. I'm glad to hear there's nothing that a lender can really do to an installment loan, though.