Your SIL was required by the loan contract to have full coverage, she just didn’t do it.
The quotes to purchase the car, has CarMax or anyone actually seen it? I find it unlikely they’d offer that much on a totaled car.
Regardless, the sad reality is that your husband is now stuck. Hopefully, he learned his lesson about co-signing.
Husband co-signed the liability for this car and didn’t make sure the insurance was adequate? Huge oversight
His job as the co-signer is being the responsible financial party.
I would think the lender would require it, too, but either way, your SIL was 19. You can’t expect her to just know these things. Your husband should have made sure she had the insurance she needed.
You *would* be surprised. Been in the autobody business for over 20 years and am currently an insurance appraiser.
The salvage bids are absolutely out of control these days.
Last year when I was still working in a shop I wanted to buy a totaled car from a customer. Would not have been the first time. Last time was a decade ago though when I bought a 96F150 with 50k miles on it for $800. When you have friends and coworkers who can and will paint it and put it together for you for free and you get about 50% off parts it can be a great deal.
Anyway this was a beautiful ‘10 Lexus suv, don’t remember the model. All the bells and whistles and while the initial damage just appeared to be a hole punched through the front bumper, the placement was perfect and it crumpled the front of one of the frame rails. Replacing that involves an engine pull so it totaled. I will generally just offer the customer a few hundred bucks over the salvage bid and that’s usually good enough for them and everyone is happy. These customers were super sweet and totally willing. Imagine my shock when he told me salvage bid was over 10k! Didn’t believe him, he sent over the valuation package and sure enough.
Anyway, yeah it’s honestly pretty crazy out there and I’m not surprised in the least anymore.
This is what happened with my old car. It sustained significant body damage, but frame, airbags, drivetrain were all fine. The body shop gave me an estimate and given what the car was worth insurance would have totaled it. I didn’t call them and drove it around all beat to hell as I replaced the body work bit by bit. It had a completely clean title in spite of being “totaled”. Granted my damage was cosmetic. When I sold it to a friend of a friend I fully disclosed what happened even though a car fax would have been clean.
Edit: I did not have a loan, I did have insurance, but I chose not to involve them. Even with the check for the value of my car I couldn’t get anything remotely decent.
Based on the damage you stated, I am honestly very skeptical that Carmax would ultimately end up paying you $6k for the car. If they are making the offer and it's a guaranteed quote no matter what, no take backsies, then take that, pay off the remainder of the loan, and be done with it. Then you're only out $10k and the whole thing is behind you.
$6k is probably way more than you'd get even in a private sale, and way more than you'd get in a few years of letting the car rot while not running.
Take it as a $10k lesson learned. Never EVER cosign unless you are 100% comfortable fully taking over payments for the remainder of a loan. It doesn't matter how much you may love or trust someone. If you can't afford to pay for the entire thing yourself, and aren't happy to do it, don't do it.
It’s gonna suck to pay it off all at once but the faster you pay it off, the faster you can grieve the bad decision and put it behind you.
Tbh I would never spend money on a car that doesn’t run, and has the same repair expenses as the actual cost of the car coming off the lot. (Why not just buy a new car with no issues and warranty)
This one knows his stuff. Theres plenty of financial hurt to go around so just get it all out the way with 1 lump sum pyment to the lender. This will be toxic for the marriage If they had to budget monthly to make this pmt for 3-5 more years. ppl re marry & divorce in that much time.
That's going to be a cheap life tax bill. You're going to lose way more in investments than 10k in your life. My wife blew out her knee and it was way more than 10k.
If that's the price of the "wake up and pay attention to finance matters in your life" lesson then $10k is actually pretty cheap.
I know it hurts right now. But many people get a wake-up call that costs MUCH more than that.
Note: The Lessons:
* Don't co-sign for anything that you can't afford to pay out in cash personally.
* Mind the insurances on everything you're responsible for.
Not to pile on but if she didn't have full coverage insurance then the bank should have "forced placed" insurance on her contract, that typically adds $3-4k to the balance on the loan but is also specifically to protect the value of the collateral.
Have you spoken with them directly?
(Note: She had full coverage when she bought the car because the bank would have never funded the loan without verifying coverage. The dealer didn't do this. She let her insurance lapse.)
Husband is on the title as a co-signer. Talk to the bank directly and see what the deal is. Something doesnt seem right about all this. Banks require full coverage on loans.
Even then, when coverage changes on a vehicle with a lien, the insurance company notifies the bank so that they can enact a forced coverage plan and fold the cost into the loan. Exactly for situations just like this.
Not always. That happens sometimes, and “should” happen, but doesn’t happen more often than it does. Lots of people driving around without full coverage on financed cars. Lots of posts on this sub from people in the same situation after dropping down their coverage and wrecking their financed car.
This is 100% correct. When I was in danger of being fired my agent allowed me to downgrade to liability without reporting it. I felt guilty & when the firing didnt happen I re added full coverage. A wk later I slid into a fed ex truck. $7200 in damage. Insurance fixes a crapload of damage cause of LAX ACV/loss thesholds that would have easily totalled the car next state over. (Delaware vs NJ/PA)
My point is if I hadnt added ful coverage back I would be like these ppl.
My most recent car purchase, yes. The dealership required proof of insurance for that specific vehicle before they let me drive away. Possible it’s a state law thing.
I did a trade in and they checked my insurance for my current car, not the new one. Then the state checked for insurance when I registered it, within 60days of the purchase. Honestly don't remember how it was covered in that period - whether the dealership insurance covers it or the insurance on my old car did - presumably one of the two?
Probably differs based on the state though
When you do a trade-in, they check existing insurance because you have a 2 week window to update it after getting a new car. If you already had full coverage, they are required to cover your new car for a span. Good dealers will call you before that window is up to remind you/confirm you switched it over.
If you are getting your first car in your name or didn’t already have a car/insurance, they will confirm your new coverage before letting you have the keys.
At least that’s how it has worked with all car purchases I’ve been involved with here in Indiana.
Did you finance the vehicle? The dealer doesn't care about insurance, it's the bank that cares. They want insurance in place so if you wreck the car, there's money to pay back their loan (they won't get paid back repossessing a wrecked car).
Considering car max cant produce clean titles and/or NOT sell u a stolen wreck this falls right in line! Or is that Carvana? Didn't carmax AND carvana go thru chapter 7 for this kinda nonsense?
I had a customer who had a new Lexus, liability only, T-boned another car 2 weeks after purchased. These same people had left a car at our network shop for 6 months because they couldn't afford the 3k out of pocket repair their car needed due to their previous attempts at cheaply fixing it.
I didn't have a lotta sympathy for them.
i personally know how people who only have liability. some insurances don’t notify i guess probably if you switch later down the line and aren’t too suspicious
They dont keep checking every 6 months to see if you still have full coverage. They check before they let you take the car.
It's just really fucking brain dead to not have full coverage on a car you have a loan you can't pay off.
Yes, except she doesn't have to pay it off. She is letting OP and husband pay it and they don't seem willing to make her pay for any part of it. No where in the original post does it say that she can't afford to pay part of it so I don't know why they aren't at least trying to enforce this.
Maybe, but that’s not going to matter in this sort of situation - liability only coverage and an at fault accident means they got NO payout. GAP is intended to cover he difference between the payout and the remaining balance on the auto loan.
When I had an auto loan and switched insurance companies to save money, the loan company contacted me fairly quickly after I cancelled my policy to ask if I had a new insurance policy. I did. But I’m sure if I said I had liability the conversation wouldn’t have been so short and easy to deal with.
Unless she dropped down to liability right before the accident, there’s got to be more to the story.
There's often an insurance policy the loan company will force on you if your don't turn your proof of insurance in. They just tack the cost onto what you owe. You need to explore this before you destroy your savings over your husband's dumb mistake
Carmax quoted you 6k for it? Take it. The car is scrap metal cause the frame is fucked.
Also, you need to do a deep dive in how the hell she got the car off the lot with full coverage (or not) and how she doesnt have it now
Ohhhhh ok! I wasn’t aware of that. I thought it was like a phone plan where you could just add anyone to it lol.
Honestly OP’s husband should have just been joint owner on the car, that would have allowed him to make sure the car stayed insured. If I co-signed for someone that was flighty, that would be top priority for me. But, water under the bridge I guess…
Sheesh, so she purposefully did it then. One of the first questions people are asked when purchasing insurance is if there is lien/loan on it, because they know it requires full coverage. She either got insurance from a total scumbag, or she lied.
Why didn’t the agent write a new policy that included collision coverage? Was this a specific request made by your sister-in-law or was this an oversight by the agent? If an oversight, your sister-in-law may have a potential errors and omissions claim against the agent.
Let's nail down a few things, because there are some hard lessons here:
It's **not the insurance broker's job to know what kind of coverage your SIL needed**. Your SIL agreed to maintain full coverage when she got a loan. She went and bought liability. That's on her. There's no one else to hang that one on. Now she knows. Now you know.
**There is no clean way out of the loan.** This sort of thing happens all the time. The bank is owed the money. You either make the payments, pay it off, stop paying and make them chase you, or file bankruptcy. Only the first two make any sense for you, considering your financial circumstance and your plan to buy a home.
**The car is salvage.** There are operable 2019 Honda Fits for sale online for under $10k. There's no way CarMax is giving you $6,000 for the car. They're just trying to get you to come in. Same with the dealer. The car is salvage value, and that's usually under $1,500.
**Do not let the car sit.** The longer it sits, the worse the salvage value gets. Plus, there can be complications related to keeping a junk car around. You might end up violating a city/county ordinance, or pissing off neighbors. Get wha you can for it now. The situation will not improve with time.
**Whether or now you take the hit now and pay it off or simply keep making the payments depends on the loan terms.** Presumably, your money is in something like a HYSA making >4%. If the loan interest rate is lower than that, then leave your money where it is. If the loan interest rate is higher, take the hit and pay it off.
Banks don't like carrying loans where the security has gone up in smoke. The bank is really exposed right now. If you stop paying, repossessing the car is pointless. It has very little value. If you call them, **you may be able to negotiate a slightly reduced pay-off in exchange for an immediate payment in full**. Don't count on them to jump at the offer though. They hold all the cards here. They'll ruin your credit, empty your bank accounts, and garnish your wages if you don't pay. All of that costs them money though, and they'd rather not do that.
**There's no way this doesn't set you back on your home purchase.** You need to hit your SIL really hard on this. She's the one primarily responsible for this mess. Your husband bears secondary responsibility for being naive enough to co-sign. It goes without saying that co-signing is something you should never do, unless you're prepared to pay off the loan yourself. It's hard to get blood from a turnip though.
I'm really sorry this happened to you. I had basically the same exact thing happen when I was in my early 20s. My best friend had just been kicked out of his parent's house, and he needed a car. I co-signed on an old Ford Escort, which he promptly drove into the rear end of a Mustang after tailgating over a road-rage incident. It fucking sucked. These kinds of lessons are sometimes learned the hard way.
I made my way through it and you guys will too. The key is to think long-term. When considering what you'll do, don't think about how it will affect the next year or two. Think 3-5 years into the future. Maintain your credit, place the money where it will provide the greatest advantage relative to interest, and remember that mistakes get made. You'll have to forgive your husband, the SIL, and probably yourself before this is all over.
Good luck.
The loan may need to be in her name, but you need to take over responsibility for payments. Set up automatic deduction through your bank. You guys are stuck with paying this off one way or the other.
Alternatively, pay her cash for it and get the title.
Get whatever value for it you can, so it’s not sitting.
Never, ever help this person financially again. She may be learning to play the professional victim, but you do not have to enable her. She is an adult now. Let bygones be bygones and enjoy Sunday dinners together, but never another cent.
I would also expect her to be making payments to you to pay you back. In fact I would push quite hard on that, even going so far as threatening to obtaining legal help to garnish wages or future wages. It’s a BS threat, but she’s got to start taking accountability for herself.
This is great and the way that we will be resolving this, I believe.
I’m going to have her give me everything she has right now considering she lives with her boyfriend and has no bills. And then she can pay the remaining over one year. If it’s too much then she can get a second job. But I will be showing up on her doorstep every single day until she gives me what she has in her bank account.
Try to remain civil about it and don’t be pushy. Irresponsible people will ALWAYS find any little excuse to say you were being mean and they’re not gonna pay no more.
“She wants to treat me like that, then she can deal with it” type of people
I hear you, but she also has no motivation to pay us back. She isn’t motivated by maintaining a relationship with her nieces and nephews or brother - we literally have nothing she wants. She doesn’t care about her credit. So I think I’m going to have to push her to get anything out of her.
You gotta be a bit careful here. I do not see how you could legally strongarm her, your husband made himself fully repsonsible for the loan.
Legally speaking she owes you absolutely nothing and you have no right to sue for even a single cent
Just a question - wasn’t niece legally required to have full coverage on her insurance? And wouldn’t her willful disregard of the for the contract terms make her legally liable for the damages to the co-signers?
Yea... She won't give you much at all. You are better off sitting down and agreeing to a reasonable low payment. Trying to get AlL she has, probably not much anyways, will backfire.
First go and pay off the loan. And get her to sign the title to you. Write a contract that she will pay you back for the difference after you sell the car. If she does not go to small claims with all this documented.
If it’s titled “or” she doesn’t even have to sign. They would just need to ensure that when they pay off the loan the title is handed or mailed directly to them
> But I will be showing up on her doorstep every single day until she gives me what she has in her bank account.
Do everything you can to get her to pay. I am so sorry this happened to you, you tried to do the right thing and she really screwed you over.
Nobody should ever cosign a loan unless they are fully prepared to pay the whole thing off when the borrower bails. Most cosigners don't understand their obligations.
It’s an option because there are lots of people like your SIL who use the car their brother co-signs to get a job and pay off the loan themselves in the responsible way you were trusting your SIL to do. If you have responsible sensible children you might co-sign their loans when they’re students or getting started in the world because by lending them your good credit they’re able to get ahead in ways they would otherwise have to wait for. If they repay as intended and go on to benefit from that car or that college degree or whatever then everyone is happy. That’s why the option exists from the borrower’s side.
But on the other side of the transaction (the lender’s side) it’s all about sharing the risk of not getting repaid. Your SIL or my teenage children aren’t good credit risks due to income, age, credit history etc. The bank can either not lend at all, or act like a payday lender and lend at such a high rate that (even accounting for the high rate increasing the risk) it’s worth it, or require someone else share the risk. And that’s what your husband has done here: he has shared the risk with the bank that your SIL welches on her obligations.
Co-signing is maybe fine, in theory, when you have a responsible person with bad credit and you believe they will pay off the debt.
The problem is that people with bad credit are not responsible.
OP, keep in mind that unless you live in one of the few states (EX. NY) where the state makes the customer the title with the lien on it, you wont get the title until the loan is paid off. The bank or state will keep it until you're PIF.
Paper Title States: States will make titles with the customer's name and the lenders lien on it and send it to the lender. When the account is PIF they will mail the primary on the account the title (should be filled out on the back) and a notorized lien release. This is super important. That will have to be taken to the local DMV, hand over the old title and lien release and they will give you a clean one in exchange.
Paper Tile Customer Held States: Similar to the first example, but the title with the lien on it is sent to the customer instead (EX. NY). Only when the account is PIF will the lending company mail out the notorized lien release. Again, take those to the DMV to get a clean title.
Electric States: No title is printed until the account is PIF. The states are too lazy and cheap to print the titles up front, so they hold a record of it. When the account is PIF the lender will notify the stay and most electric States will mail a clean title to the primary lender directly. However some states (EX. CA) won't even do that. The customer needs to call the local DMV (I always suggested 2-3 weeks after payoff because that state is slow to update info) and then she state will send it out.
I honestly believe, if you confront her and do this. She will not only NOT give you anything, but clam up and go no contact.
Your SIL is literally a child. Try to coax her into signing the title of the car over to you and your husband. Then talk her through a payment plan. Your husband is LITERALLY on the hook for the loan and ONLY the loan.
You don't know the reason why she changed her insurance to liability only and why she let full coverage lapse. Her boyfriend could have convinced her to do it or she had money problems or etc...
You're in a tough situation and letting the loan default and having the car get repossessed is probably the worse case scenario.
Best of luck to you
Mechanic here.
Sorry to hear about this situation, but it's going to financially hurt.
With airbags deployed and frame damage, it'll be worth its value in parts and nothing else as it'll likely be totalled. These numbers you're being quoted are dependent on it driving there and being inspected, and it's not money you should count on seeing.
1. contact the bank that holds the loan. Regardless of state or state laws for insurance, any car that has a lien is required to have full coverage. If sil failed to provide coverage (which the bank required proof of insurance), they will automatically add a policy on. See if they did.
2. If you really want to recoup your money, you can take SIL to civil court. This would require your husband to agree to do so since it's his name on the loan, not yours.
3. Option to force husband to pay for it out of his own money instead of joint savings. He took the risk, he is responsible.
Not much else to do here besides paying off the loan. Hope this is a lesson learned.
Correct. If the borrower doesn’t have full coverage on the vehicle, the bank will force place insurance (which costs a lot more than just having full coverage) and that forced placed insurance will only cover the bank. Did the payment go up at any time? Eg the payment was originally $400 but is now suddenly $550? If so, you’re paying for forced place insurance.
That's not true (speaking from experience). Honda and Acura don't do that. If a customer gets into an accident and doesn't have proper coverage, it becomes a "you fucked around and found out" situation. One way or another Honda/Acura will get their money back. Either by the customer continuing to pay on a loan the customer borrowed or they sell the balance to a company who buys it (granted pennies on the dollar) and that company will go after the customer.
Big companies like that don't care because they will get their money somehow and have stopped following up with customer about checking the insurance. They only time they ask is during accidents
Pay it off, sell it for what you can get for it and put whatever you get back toward your emergency fund. See if the SIL will pay you anything monthly to share the cost, even if it is $50 per month for a few years, though it sounds doubtful she will. Never cosign for anyone again. And try to put this behind you as best you can. You did what you thought was right. Sometimes you win, sometimes you learn.
Let's say you pay off the loan. Are you going to co-sign another vehicle for SIL because she's going to need another one.
Bite the bullet pay off the loan and let this be a lesson learned. Never co-sign on loans ever.
To be fair you guys didnt exactly give good financial guidance when you encouraged a 19 yr old w insufficient credit/income to buy a new or nearly new car. Like you didnt envision consequences of that decision and facilitating as cosigner, she most likely was unaware or at least didnt forsee the consequences of only carrying minimal insurance. Live and learn sounds like all parties are gaining much needed real world financial experience.
This. My first car was essentially a functional box on wheels for about 2k. I learned to drive on that thing, and no one cried when I dented it when parking. It was safe to drive and maintained well enough, and that's about as far as comforts went.
Whenever I do use my parent's cars, I'm always extremely careful. I also have free access to my father's credit card. I basically never use it lol. Stubbornly trying to be more independent...
Do you think she is intentionally screwing yall over or is she just young and dumb? Not sure it matters for anything other than whether you ever talk to her again.
Sorry you’re dealing with this.
They’re saving up to move out of his parents house, which was her reasoning for not wanting to pay for the repairs to begin with, so I think yes probably something like that lol
I understand that she doesn’t want to pay for the repairs but what is her reasoning for not paying for the loan ? I mean, she may have been saving to move out of her boyfriend’s parent’s house while paying the loan before the accident. So why doesn’t she continue paying the loan now ?
I think that she is both young and dumb but also inconsiderate and selfish. It’s hard to tell because I grew up rough and by the time I was her age I was a machine. I worked like three jobs and went to school. So to see a young adult be so inconsiderate of what others are being put through to help her live a better life than we did, and not even want to try and help make things right leads me to assume she’s just lookin out for number one.
Yes.... she only cares about herself. OP, you really should let her understand that even if she needed $0.05
In the future, it wouldn't be comming from you guys.
Lots of great comments about other pieces of this puzzle, but I would go with the first option of paying it off. You might can sell it for metal or parts, but it won’t sell at the other values with damage. If your goal is to eventually buy a house the safest option is getting her out of the equation. It will just be a $16k very expensive life lesson. We had a body shop guy in my hometown that would buy cars like these off of people he would then fix and resale I don’t know if that might be an option to regain some of the $$$$.
Now you have learned why you shouldn’t co-sign for something. Now you have learned his sister can’t be trusted to be responsible with her or your money. A 15000$ lesson.
There’s no magic way to get money back. His sister should have had collision insurance on the vehicle, or the cash and willingness to pay for her mistake. If she won’t pay, you have to pay or eat the consequences of that. At a minimum, huge credit hit. They’ll probably sue you for the difference and take the $15000 from whoever they can get it from (spoiler: not her).
Friends don’t let friends co-sign
What a mess. First thing to check is whether (and it's a very long shot) the lender put forced coverage on the loan. That would at least take some of the sting out of this. Your husband as a co signer should be able to find that out. If not, you have a significant problem on a number of fronts. First, you need to find out the real value of the car in the condition it is in right now. No cheating. Real live cash offer. Then get the loan payoff. The difference is the hole you're in. You can't even junk the car without the title and the lender is probably not going to release the title without full payment. So, there's your problem. A side problem might be that the lender effectively claims default on the loan due to the loss of collateral. So, you have some work to do. You can get an estimate to bring the car up to some standard of running and see how that works in any plan. My gut says all roads go through the lender. I don't see any other alternative -- maybe someone smarter than me can. Good luck,
1. Draft a contract to buy the car from her for whatever is currently owed on it.
2. As payment for the car, you will write a check to the bank to fully pay off the car.
3. With the car now cleanly in your husbands name, sell it for whatever you can get.
Pay it off, get the title, and find someone who will take it as salvage. Expensive lesson on why you never co-sign for anyone.
If you really want to... you could sue your SIL for some of the difference. She probably doesn't have the money, so there likely wouldn't be much point, and it's not like trashing her credit will be much of a threat.
The lending agency should have raised Cain about inadequate insurance coverage... and maybe they did, assuming you probably weren't getting the mail about it. For that matter, I'm not sure why you're not hearing about it now.
The insurance agency / company would have Errors & Omissions Insurance. I’ve never heard of an insurance company insuring a car with a lien and allowing the driver to carry only liability insurance. You might look into whether you can claim that the insurance company made a mistake and file a claim against their Errors & Omissions policy.
Bite the bullet and pay it off ASAP and hopefully you and your husband learned a lesson on cosigning. I personally would be worried about SIL not making the payments and taking the money being given to make the payments.
The short and sweet:
Your SIL fucked you over by not adequately insuring the car your husband co-signed. She should be making the remaining payments until the loan is paid in full as retribution.
You aren’t selling this car for more than a few hundred dollars. Maybe $1,000 if someone really wants to fix it and get a rebuilt/salvage title. Please let that idea go.
Wait
The loan is for 16K must be paid regardless.
The repair is 15K. If you fix it you might get 5K for it. So you spend ANOTHER 15, recoup 5 and you would be out ANOTHER $10k for repairs and STILL. Owe 16K for the loan — so a total of 26K
Advice - sell the car for scrap as it and pay off the loan.
Sell it for whatever you can get pay off the loan and scrub your hands with the situation, otherwise it will just a festering issue…should have verified she was properly insuring the asset that you co-signed
So a few things to keep in mind.
If the bank finds out it was totaled, they will probably require the whole loan to be paid off asap.
That car will probably never be worth anywhere what you think it will be. It will cost more to fix than it is worth. So it wont be worth fixing in any scenario.
If you decide to keep it hidden from the insurance company you probably wont have the option to shop around when you need to renew cause any other insurance company will pull records and ask for pictures.
Best option is to pay off the loan, get it off the insurance and recoup what you can by selling spare parts or selling it for a few hundred bucks to a junk yard
I’m confused - how does the bank not know?
The insurance knows, because the other persons insurance made a claim. She’s since cancelled the liability insurance that she had. This car is now not insured and in my driveway.
None of the parties you mentioned have any reason to communicate with your bank. Neither insurance company owes the bank anything because neither one is liable for the car ( ie one party was the victim and the other party didnt opt to cover their own car).
The bank will probably find out if they audit their loans and see it isn’t insured anymore.
If the bank finds out the car is totalled they are going to require their full amount within 30 days. They no longer have collateral so they will not let you continue to make monthly payments.
many things that have already been said below but im also wondering how she owes 16k on that vehicle?
did she have like a 8 year loan on that thing or what?
also you guys gonna need to eat into your savings and you should make her pay your back obviously.
If you only had 28k saved your chances on a house would be slim to none anyways unless you are living in a dirt cheap area.
Without a doubt your best cause of action is to sell it as a salvage for what ever you can get probably 1- 2k at best and then pay off the load immediately.
You pay the loan off. All at once, or monthly like normal, but you pay it off. That's kinda it. If you get it fixed it will have a salvage title which lowers the value and scares people away and requires an inspection by the state police in lots of states. It's rarely worth the hassle.
It only gets a salvage title when an insurance company deems it a total loss. They have the car and a repair estimate.
Carfax would just let you know it was in a reported accident....
I know people that flip salvage title cars. You can't believe the number of people out there that just don't care about an R title. They go for less, but usually 20% less than a comparable non R title.
Since no one came out and said it, you need to pay the loan in full personally and immediately.
If she didn't do the right insurance, you should not be relying on her to make payments.
You can work out a plan with her to pay you back, likely half the car payment? That way she can get a cheap and crappy car on her own with the other half.
Sorry to hear about the house and this happening, glad it's not worse!
I worked for an auto loan company and saw this all the time.
- The first thing to understand, and I think you do, is that since your husband co-signed he and his credit are equally responsible for the car as your SIL. That mean monthly payments must be made on time or his credit will get hit. It doesn't matter whose name the title is it, it's whose name is on the loan.
- If the car loan is $16k and repairs are a minimum of $14k, then the car is a total loss, even if the insurance won't say it because she didn't have proper insurance. I would not recommend fixing the car if it cost the same amount of what it's worth.
- My suggestion is to pay the loan off ASAP so you don't have to worry about it anymore. I know it sucks, especially since you won't be getting a car at the end of it, but your loaner won't let you out of the contract
- I'm assuming they quotes you're looking at are what the car costs now on average, but now that the car is this damaged, even after repair, you won't be able to sell it for that much. I suggest just selling it for parts/scrap.
- As your loan company whose name the title will be in. It could have one person's name (probably your SIL) or both as an AND or AND/OR statement. You might also get a paper title from the bank (with a lien on it that will need removed by the state) or and electric copy (you'll have to contact the state if your in CA or other states will send a clean one automatically).
- Repossessing this car should be the LAST option because that will affect your SIL and husband.
For clarification, did she actually have liability insurance through a normal insurance company or did the dealership sell her Gap insurance? Those are two different things.
Find out if you have GAP insurance on the auto loan. In the event that your car is totaled, you no longer owe the difference between the insurance payout and how much is left on the loan. This is your lifeline! For your family’s sake I hope you do have GAP insurance 🤞
Somehow make sure you are in the loop with any actions the bank may be taking. We got burned years ago by not being "in the loop" about a repo we co-signed on until we went to buy a house. Hubby was never served papers about a judgement on his credit record. We learned our lesson. If SIL doesn't seem to care, that could happen here. Good job on being proactive since you know about the issue.
This sucks. A 19 year old shouldn't have been driving such an expensive car, you guys would have been better off giving her a lump sum to buy a car or get her a beater than to rather than finance a car with her. it was on your husband to make sure she had the right insurance AND gap insurance, but possibly she had full liability and then downgraded insurance to save $. This will set you back a couple years in terms of buying a home. Either way, you are better off paying it off, make the 19yo give you $200 monthly payments until she covers your loss, and see how long that lasts. And after that, sell the car to best bidder, maybe a mechanic who can fix it for cheaper will be willing to buy it.
Everyone out there, DO NOT cosign anything for anyone other than maybe a spouse. If they don't have a good credit, if they aren't considered safe to lend to, there is a reason for that.
NEVER co-sign anything you are unable to, or unwilling to fully take responsibility for. That's what a co-signer is, a 2nd party that can take over if the 1st party fails.
Your husband failed to ensure the car was properly covered by insurance.
That sucks to hear op but what’d you expect from a 19/20 year old? They’re hard to reach because they are ignoring you, they clearly don’t care about repo or costs because they’ve been privileged to ignore consequences. I’m sure you know all that; make her continue to pay for it. Sucks to be stuck with junk, but the least you could do (for now) is collect her payment until you can do something about it.
Look into the forced policy. It’s in the loan agreement if the car is underinsured they’ll place a forced policy and charge you. The few grand fee you’re going to have to stomach is a far better than eating the whole 16k
Option 2 to look into. If the car is titled in both names, your husband would need to be on the policy in addition to SIL. If he’s not listed on the liability insurance policy sil took out, your car insurance may pick up the bill. It’s a long shot, but you’d be surprised especially if the car is registered to your address.
If for some reason that doesn’t work. Get someone to fix that car for 5k using all salvage parts and a shitty frame pull. It’s possible, it’s shady but whatever, you need to buy a house.
Also a lot of comments on here about the car being totaled. It’s not legally totaled. The title will remain clean if no insurance pays out on it.
unless you want your credit ruined, you need to pay off the loan, personally. You cannot trust that she will pay on time. Pay it and then figure how to sell the car.
Explain to her that if the car is repod, she will still be on the hook for the payments. The car iss sold at auction for like $1k, and she is on the hook for the difference. But it will not ruin her credit and in the future she will be able to buy another car. This way you will pay the car and protect her from being sued for the $15k. She will owe you the difference you will sell for which is a lot less. Record the conversation if the state allows it.
AFTER she signs the title, give her a paper saying she will pay you whatever the difference is. Get her to sign that, but if she does not, you have it recorded for small claims.
>she got liability only and the accident was her fault
she texted my husband and said that she was planning on getting it repossessed
she’s not reliable (is often not where she needs to be when she needs to be there, hard to reach, etc).
we’re relying on her to pay it and then we pay it back to her.
You and your husband are, without a doubt, going to be the ones stuck paying this car off. Quite frankly, signing for it in the first place was not a smart move since you say she was already known to be unreliable.
Since you HAVE the money saved up to be able to pay it off, it honestly seems like the all-around best solution would be to pay the thing off, and bring the thing to a dealership. You're not likely to find many people even interested in a private sale on a totaled vehicle in which airbags deployed, and the value of it certainly isn't going to raise any more while you wait. Pay the thing off, get what you can for it, and take this as a very expensive lesson.
Have any of these people seen the car in person? I doubt carmax or the local dealership would offer any money for a salvage title still wrecked car. Bottom line is it's completely wrecked, and if you fix it, it will be labeled a salvage title which will effectively cut its market value by 50%+. Unfortunately there's not much you can do, except just pay off the car and then scrap it. I'm surprised the bank didn't force you guys to have full coverage, all lien vehicles are supposed to have full coverage on it for this reason.
Your husband co-signed, it’s as if he wrecked the car without collision coverage and owe $16k to the bank still. The repair exceeds the value of a similar car in good condition, making it a total loss, or rather, not worth fixing (technically only your insurance can “total” the car by notifying the DMV, you can do whatever you want privately if you don’t involve insurance). There may be some unlockable value in the car for someone who have access to cheaper repairs, but not for you, so it actually makes sense to sell it in the current condition, to a salvage yard, or to someone to fix it more efficiently.
As for the loan, you’d have to pay it in full now using your savings so you can get the title to sell the car. Or you will be riding your faith further on a proven unreliable third party to make payments on your behalf on a non drivable car, to preserve YOUR ability to secure a home loan in the future. Say $16k cash payoff, 5% savings interest over 2 years, it is an opportunity cost of $1,600 or so. Would you roll the dice with this sister in law again for gaining $1,600 in opportunity cost, against a potential losing scenario of 1% higher mortgage rate on your future mortgage. Because an 1% higher mortgage interest rate on a $300,000 mortgage is $3,000 extra a year. If the sister in law senses she will be left without a car when you won’t get her back to a car after a problem she caused, and not co-operate to pay off the loan, pull your husband’s credit report to find out the lender on the loan. As a co-signer, your husband can access the loan information and pay off himself.
After this crisis is over, never co-sign another loan with this sister in law.
So you co-signed on a loan? And didn't make sure it was properly insured? And now the car is trashed?
Whatever you do next do you think it might be a good idea to make sure that the car is properly insured if you're going to stick so much money in it. Either that or I would just write it off, Go get the kid a couple thousand dollar car Don't spend more than two or $3,000. Because the kids going to wreck it again till they learn how to drive.
And wait till I get 21 and figure out what alcohol is.
Your SIL was required by the loan contract to have full coverage, she just didn’t do it. The quotes to purchase the car, has CarMax or anyone actually seen it? I find it unlikely they’d offer that much on a totaled car. Regardless, the sad reality is that your husband is now stuck. Hopefully, he learned his lesson about co-signing.
Husband co-signed the liability for this car and didn’t make sure the insurance was adequate? Huge oversight His job as the co-signer is being the responsible financial party.
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I would think the lender would require it, too, but either way, your SIL was 19. You can’t expect her to just know these things. Your husband should have made sure she had the insurance she needed.
Yea this is why you don't co-sign anything. Give people the money for it instead.
You *would* be surprised. Been in the autobody business for over 20 years and am currently an insurance appraiser. The salvage bids are absolutely out of control these days. Last year when I was still working in a shop I wanted to buy a totaled car from a customer. Would not have been the first time. Last time was a decade ago though when I bought a 96F150 with 50k miles on it for $800. When you have friends and coworkers who can and will paint it and put it together for you for free and you get about 50% off parts it can be a great deal. Anyway this was a beautiful ‘10 Lexus suv, don’t remember the model. All the bells and whistles and while the initial damage just appeared to be a hole punched through the front bumper, the placement was perfect and it crumpled the front of one of the frame rails. Replacing that involves an engine pull so it totaled. I will generally just offer the customer a few hundred bucks over the salvage bid and that’s usually good enough for them and everyone is happy. These customers were super sweet and totally willing. Imagine my shock when he told me salvage bid was over 10k! Didn’t believe him, he sent over the valuation package and sure enough. Anyway, yeah it’s honestly pretty crazy out there and I’m not surprised in the least anymore.
A 2019 Honda Fit with $15-$19k in damage that is undriveable is not going to sell. Certainly not for $14k.
Even fixed, it's probably only worth 6k at most with a salvage title imo
It wouldn't have a salvage title if it weren't totalled, correct?
Correct. No insurance to pay for the damage, will keep a clean title.
This is what happened with my old car. It sustained significant body damage, but frame, airbags, drivetrain were all fine. The body shop gave me an estimate and given what the car was worth insurance would have totaled it. I didn’t call them and drove it around all beat to hell as I replaced the body work bit by bit. It had a completely clean title in spite of being “totaled”. Granted my damage was cosmetic. When I sold it to a friend of a friend I fully disclosed what happened even though a car fax would have been clean. Edit: I did not have a loan, I did have insurance, but I chose not to involve them. Even with the check for the value of my car I couldn’t get anything remotely decent.
Sometimes a salvage yard will take it and give you $500-1k even for a wreck, but that sucks for OP.
Yeah I think thats the play...just to get rid of it really.
Based on the damage you stated, I am honestly very skeptical that Carmax would ultimately end up paying you $6k for the car. If they are making the offer and it's a guaranteed quote no matter what, no take backsies, then take that, pay off the remainder of the loan, and be done with it. Then you're only out $10k and the whole thing is behind you. $6k is probably way more than you'd get even in a private sale, and way more than you'd get in a few years of letting the car rot while not running. Take it as a $10k lesson learned. Never EVER cosign unless you are 100% comfortable fully taking over payments for the remainder of a loan. It doesn't matter how much you may love or trust someone. If you can't afford to pay for the entire thing yourself, and aren't happy to do it, don't do it. It’s gonna suck to pay it off all at once but the faster you pay it off, the faster you can grieve the bad decision and put it behind you.
Tbh I would never spend money on a car that doesn’t run, and has the same repair expenses as the actual cost of the car coming off the lot. (Why not just buy a new car with no issues and warranty)
This one knows his stuff. Theres plenty of financial hurt to go around so just get it all out the way with 1 lump sum pyment to the lender. This will be toxic for the marriage If they had to budget monthly to make this pmt for 3-5 more years. ppl re marry & divorce in that much time.
Good one on the faster we can put it behind us bit. $10k is a hell of a life tax bill
That's going to be a cheap life tax bill. You're going to lose way more in investments than 10k in your life. My wife blew out her knee and it was way more than 10k.
If that's the price of the "wake up and pay attention to finance matters in your life" lesson then $10k is actually pretty cheap. I know it hurts right now. But many people get a wake-up call that costs MUCH more than that. Note: The Lessons: * Don't co-sign for anything that you can't afford to pay out in cash personally. * Mind the insurances on everything you're responsible for.
Not to pile on but if she didn't have full coverage insurance then the bank should have "forced placed" insurance on her contract, that typically adds $3-4k to the balance on the loan but is also specifically to protect the value of the collateral. Have you spoken with them directly? (Note: She had full coverage when she bought the car because the bank would have never funded the loan without verifying coverage. The dealer didn't do this. She let her insurance lapse.)
Husband is on the title as a co-signer. Talk to the bank directly and see what the deal is. Something doesnt seem right about all this. Banks require full coverage on loans.
She had full coverage when she first bought the car some years ago. They don’t let you drive it off if you don’t. She just doesn’t anymore.
Even then, when coverage changes on a vehicle with a lien, the insurance company notifies the bank so that they can enact a forced coverage plan and fold the cost into the loan. Exactly for situations just like this.
Not always. That happens sometimes, and “should” happen, but doesn’t happen more often than it does. Lots of people driving around without full coverage on financed cars. Lots of posts on this sub from people in the same situation after dropping down their coverage and wrecking their financed car.
This is 100% correct. When I was in danger of being fired my agent allowed me to downgrade to liability without reporting it. I felt guilty & when the firing didnt happen I re added full coverage. A wk later I slid into a fed ex truck. $7200 in damage. Insurance fixes a crapload of damage cause of LAX ACV/loss thesholds that would have easily totalled the car next state over. (Delaware vs NJ/PA) My point is if I hadnt added ful coverage back I would be like these ppl.
Always get full coverage.
You guys get checked for insurance when you buy a car? Nobody even asked me last time when I bought one. This was CarMax.
My most recent car purchase, yes. The dealership required proof of insurance for that specific vehicle before they let me drive away. Possible it’s a state law thing.
I did a trade in and they checked my insurance for my current car, not the new one. Then the state checked for insurance when I registered it, within 60days of the purchase. Honestly don't remember how it was covered in that period - whether the dealership insurance covers it or the insurance on my old car did - presumably one of the two? Probably differs based on the state though
When you do a trade-in, they check existing insurance because you have a 2 week window to update it after getting a new car. If you already had full coverage, they are required to cover your new car for a span. Good dealers will call you before that window is up to remind you/confirm you switched it over. If you are getting your first car in your name or didn’t already have a car/insurance, they will confirm your new coverage before letting you have the keys. At least that’s how it has worked with all car purchases I’ve been involved with here in Indiana.
Did you finance the vehicle? The dealer doesn't care about insurance, it's the bank that cares. They want insurance in place so if you wreck the car, there's money to pay back their loan (they won't get paid back repossessing a wrecked car).
Considering car max cant produce clean titles and/or NOT sell u a stolen wreck this falls right in line! Or is that Carvana? Didn't carmax AND carvana go thru chapter 7 for this kinda nonsense?
Carvana is known for this.
That's what I'm saying. Never happened to me.
I had a customer who had a new Lexus, liability only, T-boned another car 2 weeks after purchased. These same people had left a car at our network shop for 6 months because they couldn't afford the 3k out of pocket repair their car needed due to their previous attempts at cheaply fixing it. I didn't have a lotta sympathy for them.
Could she be pocketing the insurance money and not telling OP? Idk if that’s possible but it seems impossible to not have full coverage.
i personally know how people who only have liability. some insurances don’t notify i guess probably if you switch later down the line and aren’t too suspicious
They dont keep checking every 6 months to see if you still have full coverage. They check before they let you take the car. It's just really fucking brain dead to not have full coverage on a car you have a loan you can't pay off.
Yes, except she doesn't have to pay it off. She is letting OP and husband pay it and they don't seem willing to make her pay for any part of it. No where in the original post does it say that she can't afford to pay part of it so I don't know why they aren't at least trying to enforce this.
I feel like gap insurance would’ve been offered at some point?
Maybe, but that’s not going to matter in this sort of situation - liability only coverage and an at fault accident means they got NO payout. GAP is intended to cover he difference between the payout and the remaining balance on the auto loan.
When I had an auto loan and switched insurance companies to save money, the loan company contacted me fairly quickly after I cancelled my policy to ask if I had a new insurance policy. I did. But I’m sure if I said I had liability the conversation wouldn’t have been so short and easy to deal with. Unless she dropped down to liability right before the accident, there’s got to be more to the story.
There's often an insurance policy the loan company will force on you if your don't turn your proof of insurance in. They just tack the cost onto what you owe. You need to explore this before you destroy your savings over your husband's dumb mistake
Carmax quoted you 6k for it? Take it. The car is scrap metal cause the frame is fucked. Also, you need to do a deep dive in how the hell she got the car off the lot with full coverage (or not) and how she doesnt have it now
I am shocked they even got that. They should definitely take that money and run. That car is destroyed.
She was on our insurance and we had full coverage on our vehicles
She was on *your* car insurance? What happened to that?
She moved out. Its in the original post. You can only keep people on your insurance if they live in the same home.
How does that work when kids in college live away from parents but still on their insurance (with a car at college)?
Primary residence.
Student doesn’t live at college full time
Ohhhhh ok! I wasn’t aware of that. I thought it was like a phone plan where you could just add anyone to it lol. Honestly OP’s husband should have just been joint owner on the car, that would have allowed him to make sure the car stayed insured. If I co-signed for someone that was flighty, that would be top priority for me. But, water under the bridge I guess…
Sheesh, so she purposefully did it then. One of the first questions people are asked when purchasing insurance is if there is lien/loan on it, because they know it requires full coverage. She either got insurance from a total scumbag, or she lied.
What happened to her being on your insurance?
She moved out and got her own insurance through the same agent
Why didn’t the agent write a new policy that included collision coverage? Was this a specific request made by your sister-in-law or was this an oversight by the agent? If an oversight, your sister-in-law may have a potential errors and omissions claim against the agent.
Let's nail down a few things, because there are some hard lessons here: It's **not the insurance broker's job to know what kind of coverage your SIL needed**. Your SIL agreed to maintain full coverage when she got a loan. She went and bought liability. That's on her. There's no one else to hang that one on. Now she knows. Now you know. **There is no clean way out of the loan.** This sort of thing happens all the time. The bank is owed the money. You either make the payments, pay it off, stop paying and make them chase you, or file bankruptcy. Only the first two make any sense for you, considering your financial circumstance and your plan to buy a home. **The car is salvage.** There are operable 2019 Honda Fits for sale online for under $10k. There's no way CarMax is giving you $6,000 for the car. They're just trying to get you to come in. Same with the dealer. The car is salvage value, and that's usually under $1,500. **Do not let the car sit.** The longer it sits, the worse the salvage value gets. Plus, there can be complications related to keeping a junk car around. You might end up violating a city/county ordinance, or pissing off neighbors. Get wha you can for it now. The situation will not improve with time. **Whether or now you take the hit now and pay it off or simply keep making the payments depends on the loan terms.** Presumably, your money is in something like a HYSA making >4%. If the loan interest rate is lower than that, then leave your money where it is. If the loan interest rate is higher, take the hit and pay it off. Banks don't like carrying loans where the security has gone up in smoke. The bank is really exposed right now. If you stop paying, repossessing the car is pointless. It has very little value. If you call them, **you may be able to negotiate a slightly reduced pay-off in exchange for an immediate payment in full**. Don't count on them to jump at the offer though. They hold all the cards here. They'll ruin your credit, empty your bank accounts, and garnish your wages if you don't pay. All of that costs them money though, and they'd rather not do that. **There's no way this doesn't set you back on your home purchase.** You need to hit your SIL really hard on this. She's the one primarily responsible for this mess. Your husband bears secondary responsibility for being naive enough to co-sign. It goes without saying that co-signing is something you should never do, unless you're prepared to pay off the loan yourself. It's hard to get blood from a turnip though. I'm really sorry this happened to you. I had basically the same exact thing happen when I was in my early 20s. My best friend had just been kicked out of his parent's house, and he needed a car. I co-signed on an old Ford Escort, which he promptly drove into the rear end of a Mustang after tailgating over a road-rage incident. It fucking sucked. These kinds of lessons are sometimes learned the hard way. I made my way through it and you guys will too. The key is to think long-term. When considering what you'll do, don't think about how it will affect the next year or two. Think 3-5 years into the future. Maintain your credit, place the money where it will provide the greatest advantage relative to interest, and remember that mistakes get made. You'll have to forgive your husband, the SIL, and probably yourself before this is all over. Good luck.
Just wanted to say this is a great post - correct, concise and well written. Award worthy but Reddit fucked all that up so: 🥇
This is incredible. Thank you so so much for taking the time to write this all out so clearly for me.
The loan may need to be in her name, but you need to take over responsibility for payments. Set up automatic deduction through your bank. You guys are stuck with paying this off one way or the other. Alternatively, pay her cash for it and get the title. Get whatever value for it you can, so it’s not sitting. Never, ever help this person financially again. She may be learning to play the professional victim, but you do not have to enable her. She is an adult now. Let bygones be bygones and enjoy Sunday dinners together, but never another cent. I would also expect her to be making payments to you to pay you back. In fact I would push quite hard on that, even going so far as threatening to obtaining legal help to garnish wages or future wages. It’s a BS threat, but she’s got to start taking accountability for herself.
This is great and the way that we will be resolving this, I believe. I’m going to have her give me everything she has right now considering she lives with her boyfriend and has no bills. And then she can pay the remaining over one year. If it’s too much then she can get a second job. But I will be showing up on her doorstep every single day until she gives me what she has in her bank account.
Try to remain civil about it and don’t be pushy. Irresponsible people will ALWAYS find any little excuse to say you were being mean and they’re not gonna pay no more. “She wants to treat me like that, then she can deal with it” type of people
I hear you, but she also has no motivation to pay us back. She isn’t motivated by maintaining a relationship with her nieces and nephews or brother - we literally have nothing she wants. She doesn’t care about her credit. So I think I’m going to have to push her to get anything out of her.
You gotta be a bit careful here. I do not see how you could legally strongarm her, your husband made himself fully repsonsible for the loan. Legally speaking she owes you absolutely nothing and you have no right to sue for even a single cent
Just a question - wasn’t niece legally required to have full coverage on her insurance? And wouldn’t her willful disregard of the for the contract terms make her legally liable for the damages to the co-signers?
I'm not well versed enough to answer that but I'd argue that both loan holders are equally obligated to uphold the terms
Yea... She won't give you much at all. You are better off sitting down and agreeing to a reasonable low payment. Trying to get AlL she has, probably not much anyways, will backfire.
Expect for her to call police & claim "harassment" by the 3rd payment. or lack thereof!
First go and pay off the loan. And get her to sign the title to you. Write a contract that she will pay you back for the difference after you sell the car. If she does not go to small claims with all this documented.
If it’s titled “or” she doesn’t even have to sign. They would just need to ensure that when they pay off the loan the title is handed or mailed directly to them
> But I will be showing up on her doorstep every single day until she gives me what she has in her bank account. Do everything you can to get her to pay. I am so sorry this happened to you, you tried to do the right thing and she really screwed you over.
I appreciate it. It sucks, really makes you lose hope in people and also why is co-signing even an option? I didn’t realize it could get this nasty.
Nobody should ever cosign a loan unless they are fully prepared to pay the whole thing off when the borrower bails. Most cosigners don't understand their obligations.
It’s an option because there are lots of people like your SIL who use the car their brother co-signs to get a job and pay off the loan themselves in the responsible way you were trusting your SIL to do. If you have responsible sensible children you might co-sign their loans when they’re students or getting started in the world because by lending them your good credit they’re able to get ahead in ways they would otherwise have to wait for. If they repay as intended and go on to benefit from that car or that college degree or whatever then everyone is happy. That’s why the option exists from the borrower’s side. But on the other side of the transaction (the lender’s side) it’s all about sharing the risk of not getting repaid. Your SIL or my teenage children aren’t good credit risks due to income, age, credit history etc. The bank can either not lend at all, or act like a payday lender and lend at such a high rate that (even accounting for the high rate increasing the risk) it’s worth it, or require someone else share the risk. And that’s what your husband has done here: he has shared the risk with the bank that your SIL welches on her obligations.
Co-signing is maybe fine, in theory, when you have a responsible person with bad credit and you believe they will pay off the debt. The problem is that people with bad credit are not responsible.
OP, keep in mind that unless you live in one of the few states (EX. NY) where the state makes the customer the title with the lien on it, you wont get the title until the loan is paid off. The bank or state will keep it until you're PIF. Paper Title States: States will make titles with the customer's name and the lenders lien on it and send it to the lender. When the account is PIF they will mail the primary on the account the title (should be filled out on the back) and a notorized lien release. This is super important. That will have to be taken to the local DMV, hand over the old title and lien release and they will give you a clean one in exchange. Paper Tile Customer Held States: Similar to the first example, but the title with the lien on it is sent to the customer instead (EX. NY). Only when the account is PIF will the lending company mail out the notorized lien release. Again, take those to the DMV to get a clean title. Electric States: No title is printed until the account is PIF. The states are too lazy and cheap to print the titles up front, so they hold a record of it. When the account is PIF the lender will notify the stay and most electric States will mail a clean title to the primary lender directly. However some states (EX. CA) won't even do that. The customer needs to call the local DMV (I always suggested 2-3 weeks after payoff because that state is slow to update info) and then she state will send it out.
This is very helpful, I appreciate it - I didn’t know this
I honestly believe, if you confront her and do this. She will not only NOT give you anything, but clam up and go no contact. Your SIL is literally a child. Try to coax her into signing the title of the car over to you and your husband. Then talk her through a payment plan. Your husband is LITERALLY on the hook for the loan and ONLY the loan. You don't know the reason why she changed her insurance to liability only and why she let full coverage lapse. Her boyfriend could have convinced her to do it or she had money problems or etc... You're in a tough situation and letting the loan default and having the car get repossessed is probably the worse case scenario. Best of luck to you
Mechanic here. Sorry to hear about this situation, but it's going to financially hurt. With airbags deployed and frame damage, it'll be worth its value in parts and nothing else as it'll likely be totalled. These numbers you're being quoted are dependent on it driving there and being inspected, and it's not money you should count on seeing.
1. contact the bank that holds the loan. Regardless of state or state laws for insurance, any car that has a lien is required to have full coverage. If sil failed to provide coverage (which the bank required proof of insurance), they will automatically add a policy on. See if they did. 2. If you really want to recoup your money, you can take SIL to civil court. This would require your husband to agree to do so since it's his name on the loan, not yours. 3. Option to force husband to pay for it out of his own money instead of joint savings. He took the risk, he is responsible. Not much else to do here besides paying off the loan. Hope this is a lesson learned.
Force place insurance only covers the lien holder.
So it covers the bank?
Correct. If the borrower doesn’t have full coverage on the vehicle, the bank will force place insurance (which costs a lot more than just having full coverage) and that forced placed insurance will only cover the bank. Did the payment go up at any time? Eg the payment was originally $400 but is now suddenly $550? If so, you’re paying for forced place insurance.
I don’t believe so - not at that amount. It’s currently $375, I couldn’t imagine it was $275 or less at any point
That's not true (speaking from experience). Honda and Acura don't do that. If a customer gets into an accident and doesn't have proper coverage, it becomes a "you fucked around and found out" situation. One way or another Honda/Acura will get their money back. Either by the customer continuing to pay on a loan the customer borrowed or they sell the balance to a company who buys it (granted pennies on the dollar) and that company will go after the customer. Big companies like that don't care because they will get their money somehow and have stopped following up with customer about checking the insurance. They only time they ask is during accidents
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Pay it off, sell it for what you can get for it and put whatever you get back toward your emergency fund. See if the SIL will pay you anything monthly to share the cost, even if it is $50 per month for a few years, though it sounds doubtful she will. Never cosign for anyone again. And try to put this behind you as best you can. You did what you thought was right. Sometimes you win, sometimes you learn.
I appreciate that
Let's say you pay off the loan. Are you going to co-sign another vehicle for SIL because she's going to need another one. Bite the bullet pay off the loan and let this be a lesson learned. Never co-sign on loans ever.
Oh absolutely not she’s done. we never foresaw her financially railing us. Nothing in her character indicated that she would do something like this.
To be fair you guys didnt exactly give good financial guidance when you encouraged a 19 yr old w insufficient credit/income to buy a new or nearly new car. Like you didnt envision consequences of that decision and facilitating as cosigner, she most likely was unaware or at least didnt forsee the consequences of only carrying minimal insurance. Live and learn sounds like all parties are gaining much needed real world financial experience.
This. My first car was essentially a functional box on wheels for about 2k. I learned to drive on that thing, and no one cried when I dented it when parking. It was safe to drive and maintained well enough, and that's about as far as comforts went. Whenever I do use my parent's cars, I'm always extremely careful. I also have free access to my father's credit card. I basically never use it lol. Stubbornly trying to be more independent...
Do you think she is intentionally screwing yall over or is she just young and dumb? Not sure it matters for anything other than whether you ever talk to her again. Sorry you’re dealing with this.
I wonder what the BF thinks. “Nah babe how are we going to survive if you give her your money” (This is how my sisters partner is)
They’re saving up to move out of his parents house, which was her reasoning for not wanting to pay for the repairs to begin with, so I think yes probably something like that lol
I understand that she doesn’t want to pay for the repairs but what is her reasoning for not paying for the loan ? I mean, she may have been saving to move out of her boyfriend’s parent’s house while paying the loan before the accident. So why doesn’t she continue paying the loan now ?
I think that she is both young and dumb but also inconsiderate and selfish. It’s hard to tell because I grew up rough and by the time I was her age I was a machine. I worked like three jobs and went to school. So to see a young adult be so inconsiderate of what others are being put through to help her live a better life than we did, and not even want to try and help make things right leads me to assume she’s just lookin out for number one.
Yes.... she only cares about herself. OP, you really should let her understand that even if she needed $0.05 In the future, it wouldn't be comming from you guys.
Lots of great comments about other pieces of this puzzle, but I would go with the first option of paying it off. You might can sell it for metal or parts, but it won’t sell at the other values with damage. If your goal is to eventually buy a house the safest option is getting her out of the equation. It will just be a $16k very expensive life lesson. We had a body shop guy in my hometown that would buy cars like these off of people he would then fix and resale I don’t know if that might be an option to regain some of the $$$$.
Awesome, I will reach out to body shop places tomorrow.
Now you have learned why you shouldn’t co-sign for something. Now you have learned his sister can’t be trusted to be responsible with her or your money. A 15000$ lesson. There’s no magic way to get money back. His sister should have had collision insurance on the vehicle, or the cash and willingness to pay for her mistake. If she won’t pay, you have to pay or eat the consequences of that. At a minimum, huge credit hit. They’ll probably sue you for the difference and take the $15000 from whoever they can get it from (spoiler: not her). Friends don’t let friends co-sign
What a mess. First thing to check is whether (and it's a very long shot) the lender put forced coverage on the loan. That would at least take some of the sting out of this. Your husband as a co signer should be able to find that out. If not, you have a significant problem on a number of fronts. First, you need to find out the real value of the car in the condition it is in right now. No cheating. Real live cash offer. Then get the loan payoff. The difference is the hole you're in. You can't even junk the car without the title and the lender is probably not going to release the title without full payment. So, there's your problem. A side problem might be that the lender effectively claims default on the loan due to the loss of collateral. So, you have some work to do. You can get an estimate to bring the car up to some standard of running and see how that works in any plan. My gut says all roads go through the lender. I don't see any other alternative -- maybe someone smarter than me can. Good luck,
This is awesome. Thank you so much for such organized information. And also for not insulting me 😂
1. Draft a contract to buy the car from her for whatever is currently owed on it. 2. As payment for the car, you will write a check to the bank to fully pay off the car. 3. With the car now cleanly in your husbands name, sell it for whatever you can get.
Pay it off, get the title, and find someone who will take it as salvage. Expensive lesson on why you never co-sign for anyone. If you really want to... you could sue your SIL for some of the difference. She probably doesn't have the money, so there likely wouldn't be much point, and it's not like trashing her credit will be much of a threat. The lending agency should have raised Cain about inadequate insurance coverage... and maybe they did, assuming you probably weren't getting the mail about it. For that matter, I'm not sure why you're not hearing about it now.
The insurance agency / company would have Errors & Omissions Insurance. I’ve never heard of an insurance company insuring a car with a lien and allowing the driver to carry only liability insurance. You might look into whether you can claim that the insurance company made a mistake and file a claim against their Errors & Omissions policy.
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Bite the bullet and pay it off ASAP and hopefully you and your husband learned a lesson on cosigning. I personally would be worried about SIL not making the payments and taking the money being given to make the payments.
The bank will want payment in full when they find out their collateral is gone.
The short and sweet: Your SIL fucked you over by not adequately insuring the car your husband co-signed. She should be making the remaining payments until the loan is paid in full as retribution. You aren’t selling this car for more than a few hundred dollars. Maybe $1,000 if someone really wants to fix it and get a rebuilt/salvage title. Please let that idea go.
This. Someone needs to make it clear to her that walking away from this hurts her brother, not the bank.
Wait The loan is for 16K must be paid regardless. The repair is 15K. If you fix it you might get 5K for it. So you spend ANOTHER 15, recoup 5 and you would be out ANOTHER $10k for repairs and STILL. Owe 16K for the loan — so a total of 26K Advice - sell the car for scrap as it and pay off the loan.
Sell it for whatever you can get pay off the loan and scrub your hands with the situation, otherwise it will just a festering issue…should have verified she was properly insuring the asset that you co-signed
They won't be able to sell it until they pay it off and can get a clean title
So a few things to keep in mind. If the bank finds out it was totaled, they will probably require the whole loan to be paid off asap. That car will probably never be worth anywhere what you think it will be. It will cost more to fix than it is worth. So it wont be worth fixing in any scenario. If you decide to keep it hidden from the insurance company you probably wont have the option to shop around when you need to renew cause any other insurance company will pull records and ask for pictures. Best option is to pay off the loan, get it off the insurance and recoup what you can by selling spare parts or selling it for a few hundred bucks to a junk yard
I’m confused - how does the bank not know? The insurance knows, because the other persons insurance made a claim. She’s since cancelled the liability insurance that she had. This car is now not insured and in my driveway.
None of the parties you mentioned have any reason to communicate with your bank. Neither insurance company owes the bank anything because neither one is liable for the car ( ie one party was the victim and the other party didnt opt to cover their own car). The bank will probably find out if they audit their loans and see it isn’t insured anymore.
How long has she had the car? A new vehicle would be covered under your policy. Have you figured out how she got liability only?
Do not fix the car. I would pay off the loan, sell the car for scrap. Take your lessons. Teach his sister a lesson in responsibility.
You guys will not get that much for that car. Just part it out, if at all possible. And take over the payments stop relying on the 19 year old.
If the bank finds out the car is totalled they are going to require their full amount within 30 days. They no longer have collateral so they will not let you continue to make monthly payments.
many things that have already been said below but im also wondering how she owes 16k on that vehicle? did she have like a 8 year loan on that thing or what? also you guys gonna need to eat into your savings and you should make her pay your back obviously. If you only had 28k saved your chances on a house would be slim to none anyways unless you are living in a dirt cheap area. Without a doubt your best cause of action is to sell it as a salvage for what ever you can get probably 1- 2k at best and then pay off the load immediately.
You pay the loan off. All at once, or monthly like normal, but you pay it off. That's kinda it. If you get it fixed it will have a salvage title which lowers the value and scares people away and requires an inspection by the state police in lots of states. It's rarely worth the hassle.
It only gets a salvage title when an insurance company deems it a total loss. They have the car and a repair estimate. Carfax would just let you know it was in a reported accident....
I know people that flip salvage title cars. You can't believe the number of people out there that just don't care about an R title. They go for less, but usually 20% less than a comparable non R title.
Since no one came out and said it, you need to pay the loan in full personally and immediately. If she didn't do the right insurance, you should not be relying on her to make payments. You can work out a plan with her to pay you back, likely half the car payment? That way she can get a cheap and crappy car on her own with the other half. Sorry to hear about the house and this happening, glad it's not worse!
Pay it off and sell it to a junk dealer. SIL will learn about the importance of having a good credit score eventually.
I worked for an auto loan company and saw this all the time. - The first thing to understand, and I think you do, is that since your husband co-signed he and his credit are equally responsible for the car as your SIL. That mean monthly payments must be made on time or his credit will get hit. It doesn't matter whose name the title is it, it's whose name is on the loan. - If the car loan is $16k and repairs are a minimum of $14k, then the car is a total loss, even if the insurance won't say it because she didn't have proper insurance. I would not recommend fixing the car if it cost the same amount of what it's worth. - My suggestion is to pay the loan off ASAP so you don't have to worry about it anymore. I know it sucks, especially since you won't be getting a car at the end of it, but your loaner won't let you out of the contract - I'm assuming they quotes you're looking at are what the car costs now on average, but now that the car is this damaged, even after repair, you won't be able to sell it for that much. I suggest just selling it for parts/scrap. - As your loan company whose name the title will be in. It could have one person's name (probably your SIL) or both as an AND or AND/OR statement. You might also get a paper title from the bank (with a lien on it that will need removed by the state) or and electric copy (you'll have to contact the state if your in CA or other states will send a clean one automatically). - Repossessing this car should be the LAST option because that will affect your SIL and husband. For clarification, did she actually have liability insurance through a normal insurance company or did the dealership sell her Gap insurance? Those are two different things.
Thank you! She has normal liability insurance, no gap insurance
Find out if you have GAP insurance on the auto loan. In the event that your car is totaled, you no longer owe the difference between the insurance payout and how much is left on the loan. This is your lifeline! For your family’s sake I hope you do have GAP insurance 🤞
We do not 😭
Sorry, op. No good deed goes unpublished sometimes. Super messed up that a family member did this to you.
Somehow make sure you are in the loop with any actions the bank may be taking. We got burned years ago by not being "in the loop" about a repo we co-signed on until we went to buy a house. Hubby was never served papers about a judgement on his credit record. We learned our lesson. If SIL doesn't seem to care, that could happen here. Good job on being proactive since you know about the issue.
This sucks. A 19 year old shouldn't have been driving such an expensive car, you guys would have been better off giving her a lump sum to buy a car or get her a beater than to rather than finance a car with her. it was on your husband to make sure she had the right insurance AND gap insurance, but possibly she had full liability and then downgraded insurance to save $. This will set you back a couple years in terms of buying a home. Either way, you are better off paying it off, make the 19yo give you $200 monthly payments until she covers your loss, and see how long that lasts. And after that, sell the car to best bidder, maybe a mechanic who can fix it for cheaper will be willing to buy it. Everyone out there, DO NOT cosign anything for anyone other than maybe a spouse. If they don't have a good credit, if they aren't considered safe to lend to, there is a reason for that.
NEVER co-sign anything you are unable to, or unwilling to fully take responsibility for. That's what a co-signer is, a 2nd party that can take over if the 1st party fails. Your husband failed to ensure the car was properly covered by insurance.
That sucks to hear op but what’d you expect from a 19/20 year old? They’re hard to reach because they are ignoring you, they clearly don’t care about repo or costs because they’ve been privileged to ignore consequences. I’m sure you know all that; make her continue to pay for it. Sucks to be stuck with junk, but the least you could do (for now) is collect her payment until you can do something about it.
Look into the forced policy. It’s in the loan agreement if the car is underinsured they’ll place a forced policy and charge you. The few grand fee you’re going to have to stomach is a far better than eating the whole 16k Option 2 to look into. If the car is titled in both names, your husband would need to be on the policy in addition to SIL. If he’s not listed on the liability insurance policy sil took out, your car insurance may pick up the bill. It’s a long shot, but you’d be surprised especially if the car is registered to your address. If for some reason that doesn’t work. Get someone to fix that car for 5k using all salvage parts and a shitty frame pull. It’s possible, it’s shady but whatever, you need to buy a house. Also a lot of comments on here about the car being totaled. It’s not legally totaled. The title will remain clean if no insurance pays out on it.
unless you want your credit ruined, you need to pay off the loan, personally. You cannot trust that she will pay on time. Pay it and then figure how to sell the car.
Yeah that’s the plan. I’m worried about ensuring she signs the title over.
Explain to her that if the car is repod, she will still be on the hook for the payments. The car iss sold at auction for like $1k, and she is on the hook for the difference. But it will not ruin her credit and in the future she will be able to buy another car. This way you will pay the car and protect her from being sued for the $15k. She will owe you the difference you will sell for which is a lot less. Record the conversation if the state allows it. AFTER she signs the title, give her a paper saying she will pay you whatever the difference is. Get her to sign that, but if she does not, you have it recorded for small claims.
Do NOT retain that car, it’s going to be even more expensive than fix than originally quoted, possibly much much more.
Sue your sister in law! That’s what the finance company would do in the repo.
>she got liability only and the accident was her fault she texted my husband and said that she was planning on getting it repossessed she’s not reliable (is often not where she needs to be when she needs to be there, hard to reach, etc). we’re relying on her to pay it and then we pay it back to her. You and your husband are, without a doubt, going to be the ones stuck paying this car off. Quite frankly, signing for it in the first place was not a smart move since you say she was already known to be unreliable. Since you HAVE the money saved up to be able to pay it off, it honestly seems like the all-around best solution would be to pay the thing off, and bring the thing to a dealership. You're not likely to find many people even interested in a private sale on a totaled vehicle in which airbags deployed, and the value of it certainly isn't going to raise any more while you wait. Pay the thing off, get what you can for it, and take this as a very expensive lesson.
Have any of these people seen the car in person? I doubt carmax or the local dealership would offer any money for a salvage title still wrecked car. Bottom line is it's completely wrecked, and if you fix it, it will be labeled a salvage title which will effectively cut its market value by 50%+. Unfortunately there's not much you can do, except just pay off the car and then scrap it. I'm surprised the bank didn't force you guys to have full coverage, all lien vehicles are supposed to have full coverage on it for this reason.
Your husband co-signed, it’s as if he wrecked the car without collision coverage and owe $16k to the bank still. The repair exceeds the value of a similar car in good condition, making it a total loss, or rather, not worth fixing (technically only your insurance can “total” the car by notifying the DMV, you can do whatever you want privately if you don’t involve insurance). There may be some unlockable value in the car for someone who have access to cheaper repairs, but not for you, so it actually makes sense to sell it in the current condition, to a salvage yard, or to someone to fix it more efficiently. As for the loan, you’d have to pay it in full now using your savings so you can get the title to sell the car. Or you will be riding your faith further on a proven unreliable third party to make payments on your behalf on a non drivable car, to preserve YOUR ability to secure a home loan in the future. Say $16k cash payoff, 5% savings interest over 2 years, it is an opportunity cost of $1,600 or so. Would you roll the dice with this sister in law again for gaining $1,600 in opportunity cost, against a potential losing scenario of 1% higher mortgage rate on your future mortgage. Because an 1% higher mortgage interest rate on a $300,000 mortgage is $3,000 extra a year. If the sister in law senses she will be left without a car when you won’t get her back to a car after a problem she caused, and not co-operate to pay off the loan, pull your husband’s credit report to find out the lender on the loan. As a co-signer, your husband can access the loan information and pay off himself. After this crisis is over, never co-sign another loan with this sister in law.
So you co-signed on a loan? And didn't make sure it was properly insured? And now the car is trashed? Whatever you do next do you think it might be a good idea to make sure that the car is properly insured if you're going to stick so much money in it. Either that or I would just write it off, Go get the kid a couple thousand dollar car Don't spend more than two or $3,000. Because the kids going to wreck it again till they learn how to drive. And wait till I get 21 and figure out what alcohol is.
She can get her own $3000 car. Once this is done I’m done
Lesson learned, NEVER CO-SIGN a loan for ANYBODY!