If the co-signer on my car loan dies, can the family take the car from me like they're threatening to?

Question

I have a car, both me and by grandpa are on the title. As I cannot get loan on my own, my grandpa is my cosigner. My grandpa is almost 90, and chances are he may not be around till the loan is paid off.

I have been paying on my car loan for almost 3 years now, never late and usually a little extra. The car was new and has low mileage, but I still have around $12,000 to be paid, and the car itself may have a resale value of around $6,000.

Refinance on my name is not working out as I don't make enough on my own and have a poor credit score from this loan and school loans.

My family members, particularly my aunt (his daughter), are telling me that when my grandpa dies they are taking my car. Because my grandpa is on the title as well as me, I think they can legally do this. She hasn't mentioned taking over the payments on the loan, which I think I would be obligated to continue as my name is on it

However, my grandpa is still alive and I get along well with him.

Is there anything I can do to keep the car? Notarized, put it in the Will?

Answer 1

It looks to me like this is a 'call an attorney' situation, which is always a good idea in situations like this (family legal disputes). But, some information.

First off, if your family is going to take the car, you certainly won't need to make payments on it any more at that point, in my opinion. If the will goes through probate (which is the only way they'd really be able to take it), the probate judge should either leave you with the car and the payments, or neither (presumably requiring the family to pay off the loan and settle your interest in the car). Since the car has negative net value, it seems unlikely that the probate judge would take the car away from you, but who knows. Either way, if they do take the car away from you, they'll be doing you a service: you have a $6,000 car that you owe $12,000 on. Let them, and walk away and buy another car for $6,000.

Second, I'm not sure they would be allowed to in any event. See the Illinois DMV page on correcting titles in the case of a deceased owner; Illinois I believe is a joint tenancy state, meaning that once one owner dies, the other just gets the car (and the loan, though the loan documents would cover that). Unless you had an explicit agreement with your grandfather, anyway.

From that page:

Joint Ownership

A title in the names of two or more persons is considered to be in joint tenancy. Upon the death of one of them, the surviving joint tenant(s) becomes the owner(s) of the vehicle by law.

Third, your grandfather can fix all of this fairly easily by mentioning the disposition of the car and loan in his will, if he's still mentally competent and wishes to do so. If he transfers his ownership of the car to you in the will, it seems like that would be that (though again, it's not clear that the ownership wouldn't just be yours anyway).

Finally, I am not a lawyer, and I am not your lawyer, so do not construe any of the text of this post as legal advice; contact a lawyer.

Answer 2

If you've been paying on the car for three years, it's possible that your credit is in a place where you don't need a co-signer any more.

See if your bank will re-fi with you as the sole debtor. If they won't do it, find another institution who will. The re-fi will take your grandpa off the loan, and whichever institution that does the re-fi will still have a lien on the title until you pay it off. Then, if you can do this soon enough, figure out if grandpa can sign you off the title.

Answer 3

You're driving a car worth about $6000 which has a $12,000 loan against it. You're driving around in a nett debt of $6000.

The best thing your grandfather could do for you, if possible, is to take your name off both the title and the loan, refinancing the car in his name only. If possible while still letting you drive the car.

When he dies, you will be out of a car, but also out of a $12,000 debt which I'm sure you could do without.

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Okay, the best thing your grandfather could do, from your wallet's point of view, is paying off the loan for you and then taking his name off the title.

Answer 4

My grandmother passed away earlier this year. When I got my car 3 years ago, I did not have good enough credit to do it on my own or have her as a co-signer. We had arranged so that my grandmother was buying the car and I was co-signing. A similar situation was happening and I went to my bank and took out a re-finance loan prior to her passing. I explained to them that my grandmother was sick and on her death bed. They never once requested a power of attorney or required her signature. I am now the sole owner of the vehicle.

Answer 5

I think Joe is right, it seems that you will get the car once grandpa passes. It clearly states that on the DMV page.

I would work like crazy to get this car paid off ASAP. Work extra and see if you can get it paid off in less than a year. Once paid off, have grandpa sign it over to you.

This is a really toxic situation that you can reduce somewhat by having the car in your name only. Learn from this: have a will and keep it up to date. There is going to be a lot of fighting over the assets that grandpa leaves behind. You don't want that to be your legacy, and you don't want to tarnish your grandfathers memory by participating in such nonsense.

My concern is why you have such poor credit. Understand that poor credit is a choice of behavior and there is no one to blame but yourself. I would recommend to stop borrowing completely until this car is paid off and all of your obligations are paid back (that is if you have items that are in collections). No vacations, no eating out, etc... Work don't spend.

Answer 6

I was in a similar situation about a year ago, and the expedient thing to do would be to remove your grandfather from the Title. He would probably have to agree with this, but I think he will if you approach it correctly.

In my case, I was the cosigner for my son's car loan and was told by the dealer that I "had to be on the title". This is not true as far as Virginia is concerned (Illinois may be different). I know this because when my son dropped his auto insurance I got the fine for having an uninsured vehicle and was told during the hearing that the dealer was mistaken.

It all worked out in the end, but all we had to do was go down to the DMV and get my name taken off of the title.

I'm sure if you approach it this way - you do not want him to be responsible for things that you do (who would get sued if you caused an accident?) he would agree to have his name removed from the title.

Answer 7

My family members, particularly my aunt (his daughter), are telling me that when my grandpa dies they are taking my car.

Bring this up with Grandpa. If this is what he wants to have happen, then help him make it happen before you finish paying $12,000 on a car worth only $6,000. Let the Aunt and other relatives deal with the remaining $12,000.

If that isn't what he wants to have happen, then work out how you and he can legally make sure that what he wants to have happen actually happens.

If the Aunt or others bring it up, make sure they understand that you still owe $12,000 on the car, and if they get the car they also get the loan. If they refuse to pay the loan then make sure they know you will cooperate with the bank when they attempt to repossess the car - up to and including providing them with keys and location. This will hurt your credit, and you will be on the hook for the remaining portion of the loan, but you at least won't have to deal with all of it - they'll sell it at auction and your loan amount will fall a little.

But the best course of action is to work with Grandpa, and make sure that he understands the family's threats, how that will affect you since you're on the loan, and what options you'd like to pursue.

Answer 8

The lead story here is you owe $12,000 on a car worth $6000!! That is an appalling situation and worth a lot to get out of it. ($6000, or a great deal more if the car is out of warranty and you are at risk of a major repair too.)

I'm sorry if it feels like the payments you've made so far are wasted; often the numbers do work out like this, and you did get use of the car for that time period.

Now comes an "adversary", who is threatening to snatch the car away from you. I have to imagine they are emotionally motivated.

How convenient :) Let them take it.

But it's important to fully understand their motivations here. Because financially speaking, the smart play is to manage the situation so they take the car. Preferably unbeknownst that the car is upside down. Whatever their motivation is, give them enough of a fight; keep them wrapped up in emotions while your eye is on the numbers. Let them win the battle; you win the war: make sure the legal details put you in the clear of it.

Ideally, do this with consent with the grandfather "in response to his direct family's wishes", but keep up the theater of being really mad about it. Don't tell anyone for 7 years, until the statute of limitations has passed and you can't be sued for it.

Eventually they'll figure out they took a $6000 loss taking the car from you, and want to talk with you about that. Stay with blind rage at how they took my car. If they try to explain what "upside down" is, feign ignorance and get even madder, say they're lying and they won, why don't they let it go? If they ask for money, say they're swindling. "You forced me, I didn't have a choice". (which happens to be a good defense. They wanted it so bad; they shoulda done their homework. Since they were coercive it's not your job to disclose, nor your job to even know.)

If they want you to take the car back, say "can't, you forced me to buy another and I have to make payments on that one now."

Answer 9

Possession is 9/10 of the law, and any agreement between you and your grandfather is covered under the uniform commercial code covering contracts. As long as your fulfilling your obligation of making payments, the contract stands as originally agreed upon between you and the lender. In short, the car is yours until you miss payments, sell it, or it gets totalled. The fact that your upside down on value to debt isn't that big of a deal as long as you have insurance that is covering what is owed.