What can I do about recovering a vehicle that I co-signed for on a personal loan?

Question

I took out a personal loan with my ex-boyfriend to buy him a truck (I know, I'm stupid). I am the primary on the loan because I had the better credit score so it lowered the interest rate.

We are 8 months into this loan and he is already 2 payments behind which is going on my credit report.

Currently, my name is not on the title. Although his name is on the title, he does not have the title because he used it to take out another loan for at a "quick cash" place and has also defaulted on those payments.

I want to know what the possibility is of taking him to court, showing that he can not make the payments, and recovering the vehicle so that I will make the payments or sell it. Any advice? What are my options?

Answer 1

Unfortunately, you don't have any good options. Your credit report is going to be affected no matter what you do because payments have already been missed. You want to avoid having the car repossessed because that will affect your credit for a long time.

Your best (well, least sucky) path toward a solution is to get your ex to cooperate. Working it out with him is hopefully faster, easier, and less expensive than getting legal. Talk to him about the car and the fact that he can't afford it. He's not going to be able to keep the car (it'll get repossessed eventually) and I doubt he would be able to refinance on his own.

Convince him to sell the car. To you, to a third-party, to anyone. Unless the breakup was really bad and he's out to get you, appeal to his sense of goodness. If he needs help paying off the title loan, consider helping to pay for that and recouping that expense when the car sells. (Get the keys to the car and have your agreement in writing before paying anything, though!)

If none of the above works, small claims court may or may not help you. It won't cost much to file, and depending on the details, whether or not he agrees on the verbal agreement you two have, you might get a judgement in your favor. Unfortunately, given that he does not have the ability to pay his bills, your chances of collecting any judgement are a bit iffy.

Answer 2

You can't take him to court or sell the car because you are not on the title. It is his car, and unfortunately there isn't much you can do to make him change the situation unless he decides to be cooperative and do the right thing.

When you co-signed, you made a promise to pay if he did not or could not pay. The best option would be to find a way to satisfy the original debt, so that you are no longer financially responsible. Ideally, this would be selling the truck to pay off the initial loan, or refinancing in his name only (which likely isn't an option given that he needed a co-signer the first time around). In theory, you would be able to negotiate with him, and offer to pay part of the debt if he pays the remaining portion, in order to get out of the original loan. However, this is also likely no longer an option since he has a past due title loan in addition to the bank loan.

One probable outcome is that he will eventually default on the loan, in which case the bank will realize he has no assets and come after you. At that point, you may be able to negotiate with them if you don't have the ability to repay the loan.

If possible, I'd recommend building an "emergency fund" into your monthly budget so that you can avoid worst possible scenarios in the event that the situation falls apart. The good news is that once you get through this, you don't ever, ever have to do it again.