Advice needed on repo of car.

[Anonymous]

My sister co-signed for a loan for her brother-in-law.  The loan is under water and she can't afford to take over the payments.  She's in law school.  Given her good credit and the two and a half more years needed to get through law school plus good payments on her student loans and credit cards.... how much damage do you think she is looking at?  I helped her make the last payment, but neither she nor I can afford to keep this loan afloat for the next three years. She signed her last year of undergrad and it didn't take the person but several months to fall bebind.  I advised her to sell it, which she is trying to do.  However, if we can't get it sold in the next month or so.... the loan will be lost.  I don't think it is going to sell.  I am not sure if it is better to let it go today or make another payment or two and lose it then.  Advice?  Needless to say this is affecting her realtionship with her in-laws and hubby.  She is so angry.

[StartingOver10]

It is time for the in-laws to step up and refi the loan so she is removed from it.

Otherwise, they can step up by bringing in the cash to pay down the loan so the vehicle can be priced so it will sell. 

If she has to go through a repo, it will hit her credit hard and stay there for at least 7 years. It is very possible the lender will then sue her for the deficiency and get a judgment. This will create further problems for her - especially since she is in law school and presumably will graduate and obtain a career in the field. How will a repo look to future employers? Not good. 

Another good reason not to co-sign for anyone. 

[redbeard]

This is why I never co-sign.  I've been in this type of situation.  No matter what you do, even though you were the one who helped out initially, you become the 'bad guy' because you won't continue to help out.

okay.... I'm done venting my own frustration with these situations.....

If you can't sell it, call the lender and turn it back in.  Save the repo fees.  They will sell it at auction for far below what you owe on the car.  It will leave a balance owing.  Make payment arrangements on the balance.  This takes a lot of coordination and patience with the lender since they don't want this to happen.

Alternatively, sell it for less then owed, but it will be far more then the dealer will get for it at auction.  Take out a personal loan for the difference and pay it off in full.  The payments on the personal loan will be much smaller then the car payment.  

Third option, and its my least favorite.... make a deal with the brother-in-law.  Not sure if he can't or just won't make the payment.  If he can even make half the payment and your sister can pay half for a few months while he gets over whatever the problem is, it may resolve it for now.  Problem is, this will happen again... and again.... and again.  She will be a support system for her brother in law if you go this route.

Fourth option is to see if the rest of the (husbands) family can come together to help out.  Now, the fact your sister was the co-signer already answers this option.  

Yeah, I've been here a few times.  Always ended up in a repo eventually anyway.  If you are going to end up there, just get there and move on.  Keep in mind though, a repo can hurt her chances of getting on the bar since they frown on lawyers not taking care of their responsibility.  

In the future, never co-sign for something you can't just write a check for.  Need a car?  I have $2000 I can lend you.  Buy a used car, save up for the next one.  Pay me back.....

Dan

[Anonymous]

That would be ideal, but they are not going to.  The brother in law has walked away.  His family will not help and her husband doesn't have any answers at all. Her husband didn't even want to make last month's payment, which I picked  up.  She has always kept her finances separate from her husband's.  Something our parents drilled into us.  I use to think my mom was crazy but she said dad was bad with money so never had joint anything.  My husband has been good but this .......  We figure we may need to pay off anything left after the car is sold, but she is more afraid that she won't get a car loan herself after school. I don't see a clear way out, I am just trying to find the best path for her.  No one else cares about her except me as her husband told her, "that's how Jim always is."  I thought... well that would have been nice to know before everyone let her sign.  Before she signed everyone told her how mature he was.  We found out everyone was lying but thought she'd be able to pick up the pieces better. 

[Anonymous]

Repo will hit hard.  Plus if she ever wants to finance a car for herself, it will be hard to get great financing even if in all other aspects her credit is great.  She will most likely end up with a bad interest rate or jump through hoops just to get financed.  I had a deal fall through due to a repo, had a new car for 5 days, put 500 miles on it and had to turn it in because the sales guy lied to the finance guy.

Try to avioid repo if she can.

[Anonymous]

Have you taken the car to somewhere like Carmax to get an idea of how much it is worth versus how much is still owed on the loan?  If not, I suggest you do this immediately.  Your sister needs the facts to understand how much negative equity is in the car.  It might not be as bad as you think or it might be worse or it might be better.  But it gives you a baseline to work with.  Knowing this will also help you better understand what options you might have at this point.

I would try to avoid a repo at all costs.

[StartingOver10]

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@Anonymous wrote:

Have you taken the car to somewhere like Carmax to get an idea of how much it is worth versus how much is still owed on the loan?  If not, I suggest you do this immediately.  Your sister needs the facts to understand how much negative equity is in the car.  It might not be as bad as you think or it might be worse or it might be better.  But it gives you a baseline to work with.  Knowing this will also help you better understand what options you might have at this point.

I would try to avoid a repo at all costs.

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^^^Great idea ksb1.  I forgot about CARMAX and their purchase program. That you will get rid of it quickly and have a number with which to work. Since the in-laws aren't going to step up take care of it asap. She will have to bring cash to the deal if the car is upside down, but CARMAX usually offers more than typical wholesale and less than retail IME. Expensive lesson to learn. But if she lets this go to repo, she has a lot more to lose due to her future career. i wonder if the in-laws took this into consideration when they asked?  Hard to know. But no way should she help them in the future (IMO) with anything. She now knows the true character of her in-laws. 

[Anonymous]

Update:

Someone has offered to drive the car and make the payments to her.  Is this safe?  Anyone ever done this before?  There is more owed on the car right now than it is worth. Blue book is about 10K and the loan right now is for 13K.  Suggestions?

[fury1995]

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@Anonymous wrote:

Update:

Someone has offered to drive the car and make the payments to her.  Is this safe?  Anyone ever done this before?  There is more owed on the car right now than it is worth. Blue book is about 10K and the loan right now is for 13K.  Suggestions?

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No one has asked this? Who is on the title of this vehicle?

This is a double sided issue.

If you Sister is on title and the vehicle is "loaned" to someone else, there are legal ramifications pertaining to the lender and insurance. The person name on title may be held liable for anything this vehicle could become involved in.. including accidents and injuries.

If you Sister is NOT on the title, she has no legal right to the vehicle and no say as to who is in possesion of it. Also, she is not allowed to sell it. Her only legal tie to the vehcile is the loan and the requirement to repay according to the terms.

[jim44]

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@fury1995 wrote:

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@Anonymous wrote:

Update:

Someone has offered to drive the car and make the payments to her.  Is this safe?  Anyone ever done this before?  There is more owed on the car right now than it is worth. Blue book is about 10K and the loan right now is for 13K.  Suggestions?

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No one has asked this? Who is on the title of this vehicle?

This is a double sided issue.

If you Sister is on title and the vehicle is "loaned" to someone else, there are legal ramifications pertaining to the lender and insurance. The person name on title may be held liable for anything this vehicle could become involved in.. including accidents and injuries.

If you Sister is NOT on the title, she has no legal right to the vehicle and no say as to who is in possesion of it. Also, she is not allowed to sell it. Her only legal tie to the vehcile is the loan and the requirement to repay according to the terms.

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I'm in agreement Fury1995.  The OP's sister might be a co-applicant on the retail contract and not be listed as an owner on the title.  IMHO, I would NOT loan the car to anyone to drive even if they are going to make the payments. This is a lawsuite waiting to happen.

There is a lot of good advice to this impossible situation, I hope OP, your sister can find a good solution.