An auto loan requires a co-signer especially when the lender demands the loan applicant to produce such. A co-signer is usually required when you want to apply for a loan and your credit score is low. Due to your low credit score, lenders might consider you a high risk applicant. The co-signer serves as the lender’s safety net in case you default the loan. Co-signers therefore have their own rights when it comes to getting car loans. Some of these are the following:
1. A co-signer can be a co-owner of the vehicle financed through a loan when the original borrower agrees and signs a contract that both of them share the ownership of the car. A co-signer will remain as such when the signed contract states that he or she does not share the ownership of the car.
2. A co-signer and at the same time a co-owner, shares the liability for insurance charges related to an accident in case the other owner of the fails to pay for it. When the co-signer is not a co-owner, he or she has no obligation for insurance charges.
3. A co-signer has no right for the ownership of the car unless he or she is a co-owner. This means that a plain co-signer cannot gain possession, sell, and change the title of the car.
4. A co-signer but not a co-owner is obliged to pay for the car’s remaining balance in case the owner defaults the payment. Although the co-signer pays for the car’s remaining balance in full, he or she still cannot gain ownership of the vehicle. In this particular condition, the co-signer is at the losing end of the situation.
5. In case the owner of the car cannot be located, the co-signer is required to pay for the vehicle’s loan balance. In case of repossession and the vehicle is sold, the co-signer has no right to for the profit of the resulting sale.