As a cosigner of a loan who is responsible

Q: How can a cosigner get out of the loan?

Co-signers are on the hook for someone elses debt, but there are ways to get out of the loan..

Having good credit is a positive attribute that could endure you to lenders. It could also make your relatives and friends turn to you to cosign a loan. While doing so could help a loved one, there are many risks involved. For instance, if you cosign a car loan, are you liable for accidents? What effect will a cosigned loan have on your credit?

Índice Show

Who Is a Cosigner?
Cosigning on an Auto Loan
LIABILITY AFTER A CRASH
LEGAL ACTION
CONSULT WITH A HOUSTON CAR ACCIDENT ATTORNEY
Should I co-sign a loan?
Should I ask someone to co-sign my loan?
Explore loan options with CIBC
How do I protect myself as a cosigner?
How can a cosigner get out of the loan?
What are the consequences to a cosigner?
Can you remove yourself from a cosigned loan?

Cosigning a loan is a common practice in the lending world. It allows you to help out someone who the lender considers to have bad credit. However, it can also expose you to certain risks. This is why you should explore all the merits and merits before cosigning a loan.

A Houston Car Accident Attorney can answer any questions you have about your eligibility in a car accident. Contact Husain Law to learn about your rights.

Who Is a Cosigner?

Not everyone has a good credit score. For such people, getting approved for a loan can prove difficult. A cosigner increases the odds of someone with bad credit getting a loan. They usually have a lengthy credit history and a good credit score. Essentially, a cosigner agrees to pay the borrower’s loan if the borrower defaults on it.

A good number of borrowers would have a hard time getting first-time credit without cosigners. However, cosigning holds many risks for the cosigner.

Cosigning on an Auto Loan

If you cosign an auto loan, you commit your credit to it. This means that you agree to pay it off should the primary borrower default. You can cosign an auto loan for a family member or close friend. Generally, you are only responsible for the loan, not what the primary borrower does with the car.

LIABILITY AFTER A CRASH

As mentioned, cosigning an auto loan does not make you liable for what the primary borrower does with the car. You will not be held responsible for any accidents resulting from the driver’s negligent acts. However, you are liable for the loan payments, which could pose a problem if the driver is sued.

Consider a situation where the primary driver is sued for damages in a drunk driving accident. If they end up paying a lot of money in suit settlements, they might lack enough money to pay off the car loan. This will leave you to make the loan payments.

LEGAL ACTION

In the above example, the lender could sue you for unpaid loan payments if the primary borrower defaults the loan. If they are successful in court, you could have your wages garnished, and bank account levied. The court could even put a lien on your car until the loan is paid. Records of such legal actions will then appear on your credit report.

CONSULT WITH A HOUSTON CAR ACCIDENT ATTORNEY

If you cosign a car loan, are you liable for accidents? Generally speaking, you shouldn’t be held responsible for an accident if you weren’t driving the vehicle when it happened. Liability typically falls on the driver, not the owner, except in certain situations.

However, if the primary borrower gets sued for an accident and defaults on the loan, you will be responsible for making the loan payments.

Contact Husain Law to discuss your liability with an expert Houston Car Accident Attorney.

When you co-sign a loan, you promise to pay off the loan in the event the primary borrower is unable to pay off the loan. A co-signer becomes necessary when the person applying for the loan doesn't have sufficient credit history, reliability or income to get the loan on his own. For example, people who have a history of defaulting on loan payments likely wouldn't be approved, neither would a recent graduate who hasn't had time to build credit. If you've been asked to co-sign a loan or find yourself in need of a co-signer, here's how it works.

Should I co-sign a loan?

It's probably most common for parents to co-sign loans for their children who have yet to build a credit history, but other relatives and friends may also come to you. No matter who asks you to act as a co-signer, it's a decision you should weigh carefully. After all, you're being asked because the borrower was turned down. If you trust the borrower and have confidence in his or her ability to repay the loan, co-signing can be a generous way to help a friend or family member in need.

First of all, to be eligible to co-sign, you have to have a strong credit score. If you're able to co-sign, make sure you have an accurate picture of what it will mean to you and your financial situation:

Be sure you can afford to pay off the debt if the borrower defaults. If you had to assume the payments for this loan and it would hurt you financially, you probably should not co-sign the loan.
Get copies of all the loan paperwork, and be sure you understand the terms fully before agreeing. Sometimes the responsibility of the co-signer varies, and you'll want to take note of when you'll be contacted or what you'll be responsible for paying.
Consider what co-signing a loan will do to your credit score; this loan will appear on your credit report. If you plan to take out a loan yourself in the near future, you may not want to co-sign now as it will increase your apparent debt load and could potentially hurt your ability to be approved.

Should I ask someone to co-sign my loan?

If you find yourself on the other side of this equation and in need of a co-signer, you should carefully consider your options. This may be a signal that you should reconsider the loan. It may be a better financial decision to save enough money to make the purchase without a loan. You should also take steps to fix any problems on your credit report that prevented your approval.

However, if you absolutely need the loan or were denied because you're young and have yet to establish a credit history, a co-signer might be a good option. In this case, look for a co-signer who is financially responsible. If you do run into trouble on your payments, that person will have to pay on your behalf. If they don't, you'll be responsible for the loan.

When you use a co-signer, make sure you understand the terms and conditions of the loan, such as when your co-signer would be notified of your inability to pay, and which of you would be responsible for missed payments.

Explore loan options with CIBC

Whether or not you'll need a co-signer, you can explore a variety of loan and line of credit options from CIBC. You can apply for personal loans, car loans and more online, or you can talk to a CIBC advisor at 1-866-525-8622 if you have questions.

How do I protect myself as a cosigner?

5 ways to protect yourself as a co-signer.

Serve as a co-signer only for close friends or relatives. A big risk that comes with acting as a loan co-signer is potential damage to your credit score. ... .

Make sure your name is on the vehicle title. ... .

Create a contract. ... .

Track monthly payments. ... .

Ensure you can afford payments..

How can a cosigner get out of the loan?

Co-signers are on the hook for someone else's debt, but there are ways to get out of the loan..

Transfer the balance to a 0% card. ... .

Get a loan release. ... .

Consolidate or refinance the debt. ... .

Remove your name from a credit card account. ... .

Sell the financed asset..

What are the consequences to a cosigner?

A cosigner on a loan is legally responsible for the debt if the primary borrower defaults. Cosigning a loan will show up on your credit report and can impact your credit score if the primary borrower pays late or defaults. Cosigners may sign for student loans, personal loans, credit cards, and even mortgages.

Can you remove yourself from a cosigned loan?

Fortunately, you can have your name removed, but you will have to take the appropriate steps depending on the cosigned loan type. Basically, you have two options: You can enable the main borrower to assume total control of the debt or you can get rid of the debt entirely.