- Default on Payments: If the primary borrower fails to make payments on the vehicle loan, the cosigner may be held legally liable for the debt. If this happens, the cosigner may have to make up the missed payments and protect their credit. If the cosigner does not make up the missed payments and the vehicle ends up getting repossessed due to the default, the cosigner's credit may be negatively impacted.
- Repossession: If the vehicle is repossessed due to missed payments or a breach of the loan agreement, the cosigner's name is also on the loan, which means they are equally responsible for the debt. In such cases, the cosigner may have to work with the lender to resolve the situation and satisfy the outstanding debt. Otherwise, the cosigner's credit could suffer.
It's important for cosigners to carefully consider their obligations when cosigning a loan. They should ensure that they are prepared to meet the financial responsibilities of the loan if necessary, including making payments or working with the lender in the event of default or repossession. It's also advisable for both the cosigner and the primary borrower to regularly review the loan terms, understand their respective responsibilities, and stay up to date with any changes or requirements related to the loan.
