The Importance of being a co-signor

This is a great topic. I was with a client once that was a co-signor on a loan. The other applicant decided to move on from the relationship and the loan still carried on. This was a vehicle loan. They had their arrangements in place to keep making the payments on the loan until one of the applicants decided to get insurance on the vehicle without making the finance company aware, and failed to notify the insurance company of the lien holder. This vehicle was in a car accident and was a complete write-off. Thank God the occupants did not suffer any damages to their person BUT they did suffer damages to their credit. Let me explain how. When they vehicle was written off the insurance company paid one of the applicants with a cheque. That applicant did not forward all the funds to the finance company and this leaving both applicants on the hook for the balance. This would now go on the credit bureau as a collection. What started out as a great situation ended up being a horrible situation for the applicant that was unaware of this action. The learning lesson here is too really know your co-applicant before entering into an agreement with them or you could end up with a bad credit car loan, or a car loan for bad credit

Just my 2 Cents

-M