Down to last payment, woman loses car

Dear Terry,
In 2005, I bought a 1997 Buick LeSabre for $6,995, which actually cost me about $7,500 after tax, title and license. I purchased the car from a buy-here, pay-here car lot and paid $230 a month for two years faithfully, with maybe one late payment.

In the spring of this year, I co-signed on a loan for a friend who was purchasing a 1994 Cutlass Supreme for $3,500. Three weeks after he purchased the car, the axle broke and wasn't worth getting fixed. My friend stopped making payments on the car.

Months went by, but the car dealership never picked up the vehicle. All the while, I continued to steadily pay my car note. By June, I was down to my last car payment.

When I went to make the payment and inquire on my vehicle title, I was told that the balance owed on the Cutlass Supreme had been added to the account associated with my Buick LeSabre. Therefore, I could not get the title until I paid both the $150 balance owed on my car and the new balance of about $2,500 on the Cutlass.

I left without making the final car payment. In August, they came and repossessed my car. When I attempted to get my car back, they wanted repossession fees plus a new agreement to pay on the other car for which I had co-signed.

Is it illegal to add the other balance onto my balance and repossess my car for failing to make payments on the now-junked car?
-- Carla

Dear Carla,
Do you still have the papers on the loan on the Cutlass? Do they say that the loan on the Cutlass was merely an extension of the original loan on the Buick? If there's no linkage, then in all likelihood, they had no basis to demand payment on the Cutlass before releasing the title on the Buick. You should consult an attorney.

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However, there are several things you did wrong here that could jeopardize your chances of getting out of this mess.

First, unless there is a specific warranty, you can't just stop paying off the loan because a car breaks down -- no matter how expensive the breakdown. As a co-signer, you're responsible, no matter what.

Second -- but perhaps more importantly -- you should have made that last payment on the Buick. Once you walked away, you were in default on that loan, paving the way for the repossession.

Nonetheless, you should consult an attorney to see exactly where you stand.

If you have a question for Terry, e-mail him at Driving for Dollars. Save money on your car -- sign up for Bankrate's new weekend Car & Money News.