A cosigner of a car loan is legally responsible for repaying the loan if the person who took out the car loan defaults in his repayment obligations. If the original borrower dies, the cosigner has legal liability to resume the repayment obligations. The lender can file suit against the cosigner to enforce payment of the car loan should the cosigner refuse to assume the repayment obligations of the deceased borrower.
Identification
Borrowers who are relatively young or who have a poor credit history may find it difficult to secure a car loan. In such cases, to mitigate their risk, lenders will grant the loan only if the borrower obtains a cosigner. By agreeing to assume the borrowers payment obligations if the borrower defaults in the terms of repayment, the cosigner limits the lenders risk.
Contractual Liability
Legally, a cosigner is as much a party to the contract as the borrower who received the proceeds of the loan. The fact that the cosigner received nothing of value from the lender is immaterial for purposes of establishing his contractual liability. Even though the borrower is the one principally responsible under the loan contract, a cosigner is jointly liable as well. If the borrower is unable to or refuses to repay the loan, the lender can seek recourse against the cosigner. The death of the borrower does not relieve the cosigner from his legal obligation to assume the repayment obligations.
Lenders Recourse
Should the cosigner refuse to assume payment of the deceased borrowers car loan, the lender would have legal recourse against the cosigner and, in the absence of fraud, would be able to secure an enforceable judgment against the cosigner for the balance of the car loan due.
Considerations
A cosigner may have executed a separate and legally binding contract with the borrower that provides that, in the event the borrower defaults in his repayment obligations, the cosigner will be entitled to reimbursement from the borrower for all sums he has paid the lender under the terms of the car loan. If the borrower dies, the cosigner may have an action for reimbursement against the borrowers estate. However, the cosigners action against the borrowers estate in no way relieves him of his legal obligation to pay the remaining balance due on the car loan.
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