If you’re currently a primary borrower on a car loan and have a cosigner, you may be genuinely curious as to what might happen if your cosigner dies. Although it’s never easy to face the death of a family member or friend, it’s important that you know what might happen to any assets that you share.

Handling a Car Loan on Your Own

Many times, lenders require borrowers with bad credit to have a cosigner in order to approve them for financing. But once the loan agreement has been signed, if the cosigner passes the lender can’t require you to find someone else to cosign the loan in their place.

If you’re keeping up with the monthly payments, the good news is that not much changes even if your cosigner passes away. You’ll just keep on making payments until the loan is paid in full. But if the cosigner dies and you later default, you're still fully responsible for the loan, just as you would be if you still had a cosigner, and your credit score takes a hit.

Responsibility of the Cosigner on an Auto Loan

When you take on a car loan, it’s important you know what the cosigner’s role is. Unlike a co-borrower that has ownership rights, a cosigner’s main role is to help the primary borrower get approved for financing. They’re listed on the loan as a cosigner, and their credit reports also show that they cosigned on an auto loan.

A cosigner isn't legally allowed to assume ownership of the car, even if they end up paying for it to prevent a default. Essentially, a cosigner is a “silent partner” and is there to help the primary borrower successfully complete the loan by stepping in if the primary borrower is unable to make the monthly payment.

The Bottom Line

If you have a cosigner in mind, make sure you sit down and discuss with them what their role is, and what they’ll be responsible for if you run into any kind of financial trouble before the loan is paid off.

If you have bad credit and need a car loan, Auto Credit Express can help. We work with a network of special finance dealerships that know how to help car buyers in difficult credit situations. Fill out our secure auto loan request form to get the process of getting matched with a local dealer started today.