co-signer on a car loan

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  • #60911
    adiva07
    Member

    hello,

    I have a question, if i co-sign on a car loan and the persons make the payments and have been paying over year, no missed payment and have proof they pay it.Would naca factor this into my monthly debt?

    thanks in advance.

    • This topic was modified 1 year, 11 months ago by adiva07.
    #60914
    Nelsont
    Member

    Yes. Because your name is on the loan. Anything your name is on is factored in. Legally you are responsible for the car payment and the co-signer is only a backup instead of collateral if you miss a payment the co-signer will be contacted for money. If you have another arrangement as you say then that is not viewed as the legal responsibility. NACA will consider this your debt. The reason they do this is because any time there is a split bill they have to consider the chance that one of you will not be able to pay one month and the other will now be responsible for the whole bill. So if you split your cable bill that’s the same as having the entire bill on your shoulders. The debt is viewed as the total on your statement not the portion you pay.

    #60917
    TTrumble
    Member

    Hello adiva07,

    Being a co-signer on the loan does legally make it your debt and it is going to show up on your credit report. It may be possible to work around it so it doesn’t affect your affordability, but you are going to have to follow your counselor’s instructions to the letter, and the primary borrower is going to have to give their full cooperation with any requests for documents, Letters of Explanation, and so on.

    The absolute best thing you could do though is to get the main borrower to refinance the auto loan and get your name off of it. If on-time payments have been made for at least a year, the primary borrower is probably getting refinancing offers in the mail already anyway.

    It can be a real win-win situation. Case in point: I just refinanced my car loan and shopped around for a better insurance rate too. Between the two, I’m saving about $200 per month. Well worth looking into.

    Tim Trumble
    Online Operations, NACA
    ttrumble@naca.com

    #60918
    adiva07
    Member

    Thank you so much! I think i’m going to get primary borrow to refinance into their name.I would love to just eliminate that auto loan from my credit report all together.

    thanks again

    #60921
    Nelsont
    Member

    Your loan will stay on your credit report for at least 3 years. It will appear as paid and in good standing. That’s the part that matters.

    #74789
    hernandezcrystal
    Participant

    I have a similar question, except this is for a student loan. I am the co-signer for my sons student loan. I recently co-signed. There is no way for me to be removed from this that I am aware of. Especially since I just received the loan. What impact will this co-sign student loan have on me?

    #74840
    TTrumble
    Member

    Hello hernandezcrystal,

    It is going to have the exact same impact as it would on your son. It will be counted in your debts, and you will have to go through the same steps at have a payment amount calculated and added in to your debts when calculating your affordability.

    Fortunately, we will use an income based repayment figure as we would do in any other case, so the impact on your affordability will be as small as possible.

    Tim Trumble
    Online Operations, NACA

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