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What happens when a person dies owing money on a car loan?

Daniel King

in Student Loans

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Chelsea Hayes on June 20, 2018

Response . \nWithout see the contract and/or loan agreement, it is impossible to answer your question with certainty. But assuming that both agreements are fairly standard, boilerplate sorts of things, here's the basic situation: If your husband, as co-signer, was smart enough to insist on finance insurance on the deal (or if the dealership F&I person was smart enough to sell the deal and if neither your grandmother nor your husband opted out of it), then the financing of the insurance policy will pay the car in full as soon as your husband files a claim and sends the finance insurance company a copy of the death certificate.\n. \nIf, on the other hand, no finance insurance policy was purchased by your grandmother and your husband at the time of the signing of the contract, your husband must continue making payments (or must sell the car and use the proceeds to pay the loan... what you prefer). That is what co-signers do: When the principle borrower cannot pay for any reason, including death, the co-signer must honor the contract.\n. \nis finance insurance pays the car loan, then the car is free, but in your name. Therefore, your state has possession of the vehicle, and neither you nor your spouse can simply take, especially if she's intestate (without a will).\n. \nif there is no finance insurance, and your husband, therefore, should be paid, then, although it is in the possession of their property is a fairly easy process to show the executor or administrator of his goods that he is now on the hook for the payments as the co-signer and, therefore, the vehicle should be transmitted to him so that he can continue making the payments or sell it or whatever he plans to do with it.\n. \nis sold, he will not be able to give a free and clear title to the buyer until the car loan is satisfied. So if you sell, you must first call the loan company and obtain a payment amount in cash. What you sell must be equal to or greater than the amount of payment in cash or will end-up paying some money from his pocket because by hook or by crook that finance company is getting the cash payoff amount... period.\n. \nIt's probably worth sitting down with a lawyer for an hour or so, and get proper legal advice. What happens in terms of who has to pay for the car is pretty simple and doesn't really need her to talk to a lawyer. But you don't want to mess with taking things that belong to his estate until and unless it is legally permitted. And that is a problem of succession -- one worthy of speaking with the attorney, even if only briefly.


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