Can I Pay My Deceased Parent's Car Loan?

Cars often carry sentimental value to people, and when the owner of a vehicle dies, his heirs, particularly his children, may want to keep the vehicle in the family. Even without sentimental value, the vehicle may be reliable and worth keeping to one of the deceased's children. Under many circumstances, a son or daughter may pay on a parent's car loan and keep the vehicle.

Cosigning

If you are a cosigner on your parent's car loan, you should plan to continue paying because you are responsible for the loan. The cosigner is jointly and severally liable for the loan that he cosigns. This means that he and the first borrower are both responsible for the entire amount together, as well as separately. Generally, the cosigning borrowers are also named on the title of the vehicle as a co-owner, so a borrower cosigning for his parent may become the owner of the vehicle upon the parent's death even if the parent has no will.

Paying Your Parent's Loan

If a descendant is not a cosigner for his parent, but is the heir to his parent's property, he will be able to take ownership of the vehicle through the inheritance and probate process. This process does not eliminate the lien against the vehicle by the lending bank unless the borrower had life insurance on the loan. In order to keep the vehicle, the heir will have to pay off the loan, or continue making payments as the parent had agreed to, if the bank will allow this. The bank may accelerate the loan when the borrower dies, requiring payment in full immediately.

Refinancing

If an heir inherits a vehicle with a lien against it and the bank will not allow him to continue making payments, he will need to refinance the vehicle in order to keep it, or pay it off. The bank holding the lien may have a streamlined process for refinancing the loan into the heir's name. If not, the heir may need to apply for a new loan and be approved by the bank. At that point, the heir would make payments on the loan in his own name.

Other Heirs

If multiple heirs, such as multiple siblings, all have a claim to the vehicle, the situation becomes more complicated. If one sibling is a co-borrower, he will assume ownership to the exclusion of the other heirs as he is probably also listed as a co-owner. If there is no co-owner of the vehicle and a will does not apply to divide the inheritance, the probate court will divide the estate, including the vehicle, as it sees fit under the law. If you still want the vehicle, you may need to buy out the other heirs and continue making payments or refinance the loan.