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I'm asking for a friend. She cosigned a car loan with a relative with the agreement that the relative would pay for it. The relative is elderly and my friend drives her to go shopping and to appointments. The relative will be moving to another state and taking the car. If the relative doesn't pay (which is likely to happen, since she has bad credit), what would be the best thing to do to minimize the damage to her credit?
If the car is repo'd, then do lenders work out a payment plan to keep the repo of the report? Any suggestions? My friend can't afford the payment on her own, so taking the car and paying for it wouldn't be an option. But she could make smaller payments without keeping the car.
Co-signing is like getting the car on your own. So any negative impact won't be kept of the reports. How about selling the car to pay the loan instead of having it repo'ed?
The question was what to do if it gets to the point that it is repod or about to be repod. The sale of the car wouldn't cover the loan amount most likely. And the difference can't be covered with cash.
Do lenders take payment plans if that were to happen?
In addition to the good information already given, I would add that your friend needs to be constantly watching her credit report for changes to this account. Every missed/late payment is going to show up on her report. She will know well in advance of a repo that there is a problem if she watches it.
@gibeon wrote:
Have the friend receive payments directly from the relative, and the friend can send them in. OR, if it is a real bank with online banking, they both get access to the online account, so that your friend can keep tabs on it and not find out she's SOL when it's already too late.
Consigning is scary.
THIS!
Your friend needs to keep an eye on the account and be prepared to make the payment if the relative does not.
Take some photos of the car and post it on craigslist.
@Anonymous wrote:In addition to the good information already given, I would add that your friend needs to be constantly watching her credit report for changes to this account. Every missed/late payment is going to show up on her report. She will know well in advance of a repo that there is a problem if she watches it.
what a dilemna! yikes! I wouldn't let it start reporting to the credit bureaus, I would contact the bank every month to make sure the payment was made. If not, then perhaps try to refi for a longer period of time to get the payment lower if possible so you can take the car and pay it. If you can't afford a car payment then how in the world were you approved as a cosigner?! that makes no sense.
"Use your Credit wisely, don't let it use you!"~Me