Dear Driving for Dollars,
Five years ago, I got a new car with a co-signer. The other person was put down on the car loan as primary and I was put down as the secondary. I was making the payments until I got laid off. Once I got laid off, I was making payments but they were late. Then, I made a payment and found out the co-signer had paid the car loan off. Now when the title came back, it had both of our names on it. I have had the car for five years now. My question is: Can the co-signer take the car away from me without me signing off on the title even though my co-signer paid the loan off?
It’s not likely unless your friend can get your name removed from the title. Because both names are on the title, you are co-owners. Check with your state’s department of motor vehicles to find out the process for removing the secondary person from a title. It may or may not be possible, depending on your state.
If you want to keep the car, call your friend to discuss working out a payment plan for the amount your friend spent to pay off the car loan. Your friend probably paid it off to ensure you didn’t damage his or her credit. As a co-signer, the other person’s credit would be affected by your late car payments.
If the co-owned car must be sold, propose a fair split of the proceeds. Determine your percentage of ownership based on the payments you made and the other person’s percentage of ownership based on your friend’s loan payoff. Then, split the money from the sale using those percentages.
Whether you sell the car or work out a payment plan with your friend, create a written agreement that is signed and dated by both parties to provide each of you some recourse should the other person not keep his or her word.