What Are My Responsibilities As a Co-Signer on a Car Lease?

As a cosigner, you're responsible for the same leasing requirements and contract provisions as the borrower. Billing and correspondence usually goes to the registered borrower, however, so you might not be notified if the person you cosign for is missing or late on payments. Before cosigning for someone else's lease, consider your various responsibilities and how they can affect you financially.

Monthly Payments

As a cosigner, you are responsible for the consignee's monthly car payment. Even though you are likely not making the payment, you are liable if the payments are not made on time. Late payments are reported to the credit bureaus, and if you or the person you cosigned for do not make payments, both of your credit reports will reflect a history of late payments. If the vehicle is repossessed for non-payment, it will also mark your credit history, as well.

Mileage Restrictions

Even though you are not driving the vehicle, the vehicle must remain under the contracted mileage allowance when it is returned. If you are cosigning for 36 months and 12,000 miles per year, the vehicle must be turned in with 36,000 miles on it or less. If the driver goes over the contracted mileage amount, both of you are responsible for over-mileage fees. Usually, these fees are 12 to 18 cents per mile over the mileage allowance. If neither of you make the payment, it will reflect on your credit history as an unpaid debt.

Lease Return

During the time of the lease, both of the contracted lessees must maintain the vehicle and pay for repairs before the car is turned in. If the person you are cosigning for does not maintain the vehicle or brings it back without completing repairs (for body work or broken items), the leasing bank will send a bill for the cost of completing the work. It is equally your responsibility to pay the bill. This debt is also reported to the credit bureaus if it is not paid.

Warning

Consigning for a lease is risky, as leasing requires more than just timely payments. You must have excellent credit for lease approval, and the person you are cosigning for likely has a limited or poor credit history. Make sure the person you cosign for makes all payments on time and follows all contracted requirements. If the person you cosign for does not abide by the contract, you can face negative credit reporting, which affects your credit score, future lending opportunities and future interest rates.