Good credit can be an asset to you that makes you more attractive to lenders. Your family or friends may ask you to cosign a loan. It could be an opportunity to help someone close to you, but it also comes with many risks. Are you responsible for any accidents that occur if you cosign an auto loan? What is the impact of a cosigned loan on your credit rating?
Cosigning is a common practice in the lending industry. You can assist someone who has a poor credit rating. You may be exposed to certain risks. Consider all the pros and cons of cosigning a loan.
A Florida Car Accident Lawyer can answer all your questions regarding your eligibility following a car crash. Jeanette Secor, PA Attorney at law will help you to learn more about your legal rights.
What is a cosigner?
It is not everyone who has good credit that can get a loan. A cosigner with a good credit score and a long history of credit can increase the chance that a person who has poor credit will be approved for a mortgage. A cosigner is a person who agrees to pay back the loan in the event that the borrower defaults.
Cosigners are necessary for many borrowers to obtain their first credit. However, cosigning comes with many risks.
Cosigning a Auto Loan
By cosigning a car loan, you are committing to your credit. If the borrower defaults, you agree to pay back the loan. You can cosign for a family member or close friend. You are responsible only for your loan, not what the borrower decides to do with their vehicle.
Co-signer Responsibilities
Accepting a loan is a sign of your willingness to help. Although it’s a noble thing to do, you should be aware of the risks.
Shared duties
When you sign, you agree to be in a similar boat as the borrower. You will be held accountable if they do not pay. You can have your credit rating affected, making future borrowing more difficult.
Debt Obligation
You may be liable for the money you owe. If the borrower fails to pay, you can be sued by the lending institution. If you do not act, you may face significant financial difficulties.
Co-signer Rights
You must decide if you are willing to guarantee a loan. You can help a friend buy their dream car. You may put your financial security in danger. Here is a list of your rights.
You don’t own your car
If the borrower is unable or unwilling to pay, you agree to assume the auto loan. However, you do not own it. The primary borrower still owns the vehicle and can sell or trade it.
The original owner is faced with collections
Lenders will contact you if a borrower does not pay. You could be contacted first by debt collectors, and not the original owner. This can have a serious impact on your credit score.
The Loan Can Be Repaid
Some lenders release a cosigner following a certain number timely repayments and exclude you from a loan. You can avoid long-term financial obligations by minimizing your financial obligations.
LIABILITY FOR CRASHES
You are not responsible for the actions taken by the borrower if you cosign a loan. You are not responsible for accidents caused by negligent driving. The loan repayments are your responsibility, which could cause a problem if the driver is sued.
Imagine that another party sued the primary driver for damages following a drunken driving crash. If they have to settle a big lawsuit, it is possible that they will not be able to pay back the loan. The responsibility for making the loan payment will fall on you.
LEGAL ACTION
The lender may sue you if the borrower fails to pay the loan. If they win the case, you could be forced into garnishing your wages or having your bank account frozen. The court could seize your car until you repay the loan. These legal actions will then be recorded on your credit report.
Consult with a Florida car accident attorney
If you cosign a car loan, are you liable for accidents? You should not be held responsible if you were not the driver in an accident. In most cases, the driver of a vehicle is responsible for an auto accident.
You are liable for payment if the primary borrower has an accident and is sued by third parties.
Contact Jeanette Secor, Attorney at Law for a Florida auto accident lawyer, explosion lawyer or Airlines Injury Lawyer to discuss your liability.
FAQs:
Do co-signers have to pay car insurance?
Co-signers do not have to pay for their own car insurance. They cannot be sued in the event of an accident caused by a borrower’s negligence. They are responsible for the repayment of loans.
What is the minimum amount of car insurance you require for a cosigner?
Guaranteeing a loan does not affect the cost of auto insurance for a signatory. Premiums are determined by the co-signer’s driving history and insurance record. If the co-signer plans to drive the vehicle, the premiums could increase.
How many cars are you willing to co-sign?
You can sign as many vehicles as you like. Lenders often consider your credit history and income when determining whether you qualify. You must consider the risks and consequences of cosigning a loan, as you will be responsible for the repayment.
This article was written by Jeanette Secor PA Attorney at Law.
Since over 20 years, Jeanette Secor’s law firm in St. Petersburg has been the first choice of those who are seeking justice following an injury. Jeanette Secor is a renowned personal Injury Lawyer Slip and Fall St Petersburg FL. She has successfully represented clients in car accidents and motorcycle accidents.
