 Co-signer
has obligations, not rights
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 Dear
Dr. Don,
What rights does a co-signer to an automobile
loan have? Are they an owner as well as a co-borrower? -- Anxious
Ann
 Dear
Ann,
The co-signer doesn't have many rights, just
obligations. The co-signer is listed on the loan but isn't necessarily
listed on the title as co-owner of the vehicle.
There are pluses and minuses to
not being on the title. As a co-owner you could be responsible for
accidents or tickets. Since the lender has first dibs on any equity
as long as they have a lien on the title, the main advantage in
being on the title is in having some leverage with the primary borrower,
if they stop making payments.
The Federal Trade Commission's Facts for Consumers
series has a pamphlet on co-signing
a loan, that has my favorite quotation concerning co-signing,
"When you're asked to co-sign, you're being asked to take a
risk that a professional lender won't take. If the borrower met
the criteria, the lender wouldn't require a co-signer." That's
a good reason to think twice before co-signing.
Getting the lender to agree to notify you in writing
if the primary borrower misses a payment gives you time to deal
with the issue before a late payment hurts your credit report. It's
also a good idea to get a copy of the loan agreement. If you can't
get the lender to agree to notify you in writing, you may be able
to check on the account history at the lender's Web site. Make a
point of checking on the payment, monthly.
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