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  1. #1
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    Jun 2020
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    Default A Circumstance to Be Asked to Be Released from a Co-Sign on an Auto Loan

    My question involves a consumer law issue in the State of Texas:

    So, I work part time (~15hrs./week) making 20/hr. as an in-home tutor. I was asked to provide that info to the financier who was working with my friend on finding a co-signer for an auto loan on a new car purchase. So, I gave him that same information and estimated that it might not even be ~20k when totaling the sum and I'm pretty sure that's not enough income to qualify as a co-signer. So, I was speculating whether the financier inflated my income information just so I would get approved as a co-signer and the loan would be approved. But, I didn't tell him to do this and I was not made aware of this fact. So, is that grounds to seek a release from having my name on the loan as a co-signer? I can't be expected to honor the terms when my income information was probably inaccurately represented.

    Edit: Yes, I technically did personally sign the paperwork when my friend asked me to come in to the dealership to sign some things. I didn't think about my level of income should've probably disqualified me from being approved as a co-signer until another friend brought it up after the fact. But, the financier didn't talk through or point out any important aspects during the signing that made me aware he was possibly inflating my income figures for the sake of approval of the loan.

  2. #2
    Join Date
    Oct 2014
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    8,025

    Default Re: A Circumstance to Be Asked to Be Released from a Co-Sign on an Auto Loan

    You apparently don't know if your income was inflated or what the standards for granting the loan with a co-signer was for that creditor. So even if you could use the dealer inflating your income to get out of your guaranty of the loan right now you lack the information you'd need to do that. It would, by the way, be the dealer that would inflate the income figures, not the lender. Many dealers now make more money off financing incentives in selling the car than the profit off the cars themselves. So they have incentives to try to get loans approved to sell the car and get that financing incentive, too. The lender wouldn't need to inflate income figures to grant loans. If it was willing to accept lower incomes, it would just adjust its requirements accordingly.

    The problem is that the income requirements of a lender are not set to protect the borrower — the borrower has to make his/her own determination of what he or she can afford. The income requirements of the lender are meant to protect the lender. They want to be sure they'll have a reasonable shot to get repaid. The lender did grant the loan and you voluntarily agreed to guaranty the loan, having full knowledge of what your ability to pay is. So if you ask the lender to release you from the loan based on inflated income figures that the dealer gave the lender the lender is likely to say no based on the fact that you knew what your real income was and nevertheless agreed to the loan.

    No federal law gives you the right to rescind your guaranty in this circumstance. Unless Texas state law does (and I haven't researched that) you may be stuck here if your friend fails to pay the loan. Most states don't have such a law, so I'm not anticipating that Texas does as Texas is not normally on the forefront of consumer protection. But if you friend defaults the loan and the lender looks to you to pay it you would want to ask the Texas Attorney General's Office of Consumer Protection about that, and may want to see a Texas attorney who practices in the area of consumer protection, too. While you might not get released from the loan by the lender, I could see a possibility that you might have a good tort claim against the dealer if the dealer misrepresented your income to the lender. After all, in that situation it wasn't the fault of the lender that you were approved as a guarantor. It would be the fault of the dealer that gave the inflated income figures.

  3. #3
    Join Date
    Nov 2013
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    Default Re: A Circumstance to Be Asked to Be Released from a Co-Sign on an Auto Loan

    Quote Quoting moho213
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    Edit: Yes, I technically did personally sign the paperwork when my friend asked me to come in to the dealership to sign some things. I didn't think about my level of income should've probably disqualified me from being approved as a co-signer until another friend brought it up after the fact. But, the financier didn't talk through or point out any important aspects during the signing that made me aware he was possibly inflating my income figures for the sake of approval of the loan.
    In other words you signed a cosigner agreement without reading through the contract so you never saw what the dealership or the lender filled out in the contract.

    How much was the loan for? What is the term of the loan and what is the interest rate?

  4. #4
    Join Date
    Mar 2013
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    Default Re: A Circumstance to Be Asked to Be Released from a Co-Sign on an Auto Loan

    Quote Quoting moho213
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    I was asked to provide that info to the financier who was working with my friend on finding a co-signer for an auto loan on a new car purchase.
    Don't count on getting released from the loan.

    Your friend can try to refinance in his own name but that's not likely to happen.

    Is he making the payments on time, every time?

    The life lesson here is that the last person on earth you want to co-sign for is somebody who needs a co-signer. Think about it.

  5. #5
    Join Date
    Jul 2018
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    Default Re: A Circumstance to Be Asked to Be Released from a Co-Sign on an Auto Loan

    Quote Quoting moho213
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    So, I was speculating whether the financier inflated my income information just so I would get approved as a co-signer and the loan would be approved. But, I didn't tell him to do this and I was not made aware of this fact. So, is that grounds to seek a release from having my name on the loan as a co-signer?
    You're free to ask for anything if you like, but beyond that, I don't really understand the question. You seem to be asking if your speculation is grounds to void the guaranty you gave, but that's just silly, so I have to assume that's not what you're asking.


    Quote Quoting moho213
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    I can't be expected to honor the terms when my income information was probably inaccurately represented.
    "Probably inaccurately represented" by whom? Are you suggesting that some lender gave your friend a loan based on his and not your representation about your income level, that you never signed any sort of certification about your income, and that you signed the loan guaranty without having any information about what information had been given to the lender? Also, did the loan papers you signed contain any sort of representation of the accuracy of the information submitted in support of the loan? I bet they did. Did you keep copies of what you signed?

    Also, what facts make you think it's "probable" that someone misrepresented your income level? If you're "pretty sure [that your income level is] not enough income to qualify as a co-signer," why didn't you raise your concern before you signed the loan guaranty?


    Quote Quoting moho213
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    Edit: Yes, I technically did personally sign the paperwork when my friend asked me to come in to the dealership to sign some things.
    Please explain the function of the word "technically" in this sentence. Either you signed or you didn't. There's nothing "technical" about it.


    Quote Quoting moho213
    View Post
    I didn't think about my level of income should've probably disqualified me from being approved as a co-signer until another friend brought it up after the fact. But, the financier didn't talk through or point out any important aspects during the signing that made me aware he was possibly inflating my income figures for the sake of approval of the loan.
    You're assuming without evidence that this could only have happened if someone inflated your income level. However, in the absence of evidence, it is every bit as likely that your speculation that you shouldn't have qualified is wrong.

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