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Dear Terry,
A so-called friend wanted to get a car and he couldn't get approved for a loan. So, I did him a favor and
co-signed for him. It hasn't even been six months yet and he returned the car to me.
The dealership was so slick that they had put me as the main person on the loan, which I was
told was just to co-sign for him. I don't want this car and already have my own car loan. What should I do?
-- Carlos
Dear Carlos,
When you co-sign for someone, you are telling the lender you'll guarantee payment on the loan. The order in which
your name is listed on the loan does not matter. When the payments stop, the lender will come after you, because
the lender made the loan on your say-so.
Are you on the title to this car? Did your friend give you power of attorney so you can sell it?
Selling the car and paying the balance that will undoubtedly be owed on the remainder of the loan is your best
option to protect your own credit rating.
You can see if the bank will accept a short-sale -- the lender agrees to accept whatever you can
get for the vehicle -- or just let them repossess it. But with either of these options, your credit will be scarred.
This is just another example of why people shouldn't co-sign for other people.
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