Asset Repossession

 

There is always the possibility that what you cosign could be repossessed, leaving you still on the hook for most of the outstanding loan.  Ask any credit union or bank how they come out financially when goods are repossessed.  Repossession is usually a financial disaster for both the borrower and the lender. 

 

Say, for example, you signed an auto loan in the amount of $25,000.  After taxes, licensing, etc., maybe another $1,000 or so comes into play.  What if the person with whom you agreed to cosign defaults after just three months?

 

Assuming you have no extra cash flow to take over the vehicle, and the bank has to foreclose on the loan, what happens now?  The bank will simply turn the vehicle over to a third party who will wholesale out the car for perhaps $15,000, and add fees, expenses and other costs onto the balance.

 

 

Your thoughts on this subject?  Your comments appreciated!

Content © Rich Brott, 2011

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