Liability exposure co-signing for auto loan

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Big Dog
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Re: Liability exposure co-signing for auto loan

Post by Big Dog »

They have the same liability as their grandson. i.e. if their grandson causes an accident, they can be sued also, since their name is on the loan and the title. They should also be named on the insurance policy their grandson has, and make sure that there are adequate liability limits.
d's insurance store
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Re: Liability exposure co-signing for auto loan

Post by d's insurance store »

Snarky editorial comment:

I never ceased to be utterly amazed at the number of times I'm confronted with this kind of situation as an insurance agency owner from presumably intelligent people who co-sign and go on title for relatives, employees and friends and then act amazed that they become responsible for more than just loan payments as co-owners of a vehicle.

The they act like I'm the car salesman trying to upsell them when I broach the topic of adequate liability limits to protect them, when their assumption is that they have no liability interest and begin to resent the premium rate. Of course, the person doing most of the driving has no assets and the co-signing people feel no need for anything other than minimal liability limits on the policy.

Doctors, lawyers, professionals of all stripes...I've seen them all try to help out a credit maxed borrower and not limit the transaction to a loan guarantor rather than a co-signer...and they all come away pissed at me for my professional advice regarding their own protection.

From my cranky, elderly perch...screw 'em, I say.
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Re: Liability exposure co-signing for auto loan

Post by NYagent301 »

Depends on the state and motor vehicle laws. If a cosigner on loan only and not named on the title you are fine with liability but know you are on the hook if the loan is not paid and also can play in to your credit rating. If you are on the title you have a concern for liability, and follow what Big Dog says.
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Re: Liability exposure co-signing for auto loan

Post by BKCPCU »

I have always used an example the great Paul Harvey told on his radio show years ago to make the point about cosigning loans: Mom cosigned for son's motorcycle, that put her name on the title. Son got tired of the motorcycle and sold to a friend but held the title until the friend paid it off. Before the payoff was completed, the friend was taking his girlfriend for a ride. Friend crashed the motorcycle, girlfriend lost a leg. Mom lost her house.
That story makes a great point!
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