A Seattle woman turned to “The Ramsey Show” for guidance after a co-signed car loan left her responsible for a remaining balance.
“I was an idiot,” Mary told personal finance expert Dave Ramsey. She said she co-signed a vehicle loan while in a relationship and that the loan remained after the relationship ended. Mary, 60, said the debt involved a 2019 Volkswagen Jetta with about $29,000 still owed following a voluntary repossession.
She said she earned $61,000 a year, had no savings, and carried $3,000 in credit card debt while also helping make payments on the vehicle even though the borrower earned more than she did.
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At the time, Mary said she co-signed the loan in the fall of 2021 for a man she was dating, who was 43. After the relationship ended, she said she persuaded him to return the vehicle to the dealership when he could no longer make payments on time.
As she told Ramsey, the vehicle had not yet sold at auction. Once it was sold, Mary said lenders would pursue whoever signed the loan for any remaining balance.
“If the borrower stops paying, you become the borrower,” Ramsey said.
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Mary asked whether she could place a lien on a settlement her former partner expected from a motorcycle accident. She had also co-signed his Harley, which was paid off, and had text messages in which he said he would cover the remaining Jetta balance.
“I don’t trust that that’s going to happen,” Mary said.
Ramsey said waiting on someone else’s settlement was not a strategy and said planning around money controlled by another person did not resolve the debt.
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Ramsey said vehicles often sold at auction for less than the remaining loan balance, leaving a deficit. He said lenders typically pursued the people who signed the loan.
He advised Mary to tell creditors she had no money and to direct them to the borrower, who was expecting a settlement. If that did not resolve the issue, Ramsey said repossession balances were often settled for less than the full amount owed.
