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| I cosigned an auto loan for another person. This person is defaulting on the loan and I want to refinance this vehicle. Can I do it? |
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Last Updated
13th of April, 2010
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Auto refinancing is the process of replacing an existing loan and with another. Normally you would refinance to lower your interest rate, extend the term, and/or lower your overall monthly payment. And specifically related to this example, sometimes people refinance their cars to add or remove another person to/from the title.
If your question refers to refinancing the car to get it in your name only, then yes, you should apply to refinance the vehicle. Pay the overdue debt as soon as possible in order to avoid more late payments and repossession, which adversely affect your credit scores for seven years. Since you co-signed on the loan, your credit score will suffer because of any late payments that may have already been reported. Refinancing the loan into your name and bringing it current will not erase these records, but will help to prevent further damage.
The lesson here is to be extremely cautious before you co-sign on a loan or credit account. By doing so, you accept full responsibility for the debt if the other person does not pay. A co-signed account appears on both of your credit reports, and both of your credit scores will suffer if neither of you pay.
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