- Contracts are written to lock co-signers in.
- Refinancing is the best way to remove a co-signer.
- Bankruptcy will also remove a co-signer's liability.
I bought a motorcycle a year ago. Now the finance company won't honor a clause the dealer wrote into the loan. What can I do?
I co-signed for a motorcycle in Jacksonville Florida over 12 months ago at a Harley Davidson dealership. In the contract the finance officer and me put in there that after 12 months my name would come off of said loan. All payments have been made on time in fact every two weeks. More than the amount of the payment is also sent. Never has been late either. We call Harley Davidson finance company they own it. Now they say that the finance officer should not have written that and it is not legal. That the laws of Nevada apply for the loan. Not Florida laws. I have the contract no were in the contract does it mention Nevada or laws of that state. They are refusing to take my name off as a co-signer. The original owner does not want to re-finance we got a good rate at 2.9% if we have to re-finance everyone even HD is at 9.9% we would lose. My engine just blew up so I want a new car but this loan is reflecting on my credit and everyone says I have to get that taken care of. I do not have any other bills, own my home for several years. I pay for everything in cash. I don't use credit cards. My credit rating is good. How can I to get off as co-signer if the Harley people will not take me off even though I have it in writing they will?
In general, loan contracts are written to not allow a co-signer to withdraw from the contract at will. There are no, "We are not friends anymore so I want to be released from my co-signer liability" clauses in any loan contract I have seen. If the primary borrower stops making payments, the co-signer has 100% liability for the unpaid debt. There are four ways to relieve a co-signer from a loan’s liability:
- Refinance the loan in one name only
- Sell the item secured by the loan and use the proceeds from the sale to retire the loan
- File for chapter 7 bankruptcy
- If your signature was forged on the loan application, file a lawsuit against the borrower and ask the court for relief
If the loan in question is a student loan, some lenders allow for the release of the co-signer when basic requirements are fulfilled. See the Bills.com article Co-signing a Student Loan to learn more about co-signing a student loan.
The Facts Here
To paraphrase your facts, a motorcycle dealer in Florida wrote a contract to finance a motorcycle. You are a co-signer. All payments are made in a timely manner, but you want out of the deal because of the impact on your credit rating or debt-to-income ratio. The Florida dealer wrote terms that, one year later, the Nevada finance company refuses to honor.
It would be unusual for a lender to write a clause in a loan agreement that would allow a co-signer to remove him or herself from an agreement, and I am not surprised that the finance company would balk at this. Under normal circumstances, the only way you can extract yourself from this type of contract is for the other cosigner to refinance and put him or herself as the borrower. However, the Florida dealer wrote this clause into the contract, both parties signed it, and the Nevada finance company never raised this clause as an issue over the last year.
I recommend you and the cosigner to speak with an attorney in Florida with experience in consumer law to determine what your rights are under Florida law. My guess is that the Florida attorney will use a legal doctrine called "laches" to ask a Florida court to enforce the clause.
I hope this information helps you Find. Learn & Save.
Dealing with debt
Debt is used to buy a home, pay for bills, buy a car, or pay for a college education. According to the NY Federal Reserve total household debt as of Q2 2023 was $17.06 trillion. Auto loan debt was $1.582 trillion and credit card was $1.031 trillion.
A significant percentage of people in the US are struggling with monthly payments and about 26% of households in the United States have debt in collections. According to data gathered by Urban.org from a sample of credit reports, the median debt in collections is $1,739. Credit card debt is prevalent and 3% have delinquent or derogatory card debt. The median debt in collections is $422.
Each state has its rate of delinquency and share of debts in collections. For example, in Maine credit card delinquency rate was 3%, and the median credit card debt was $385.
While many households can comfortably pay off their debt, it is clear that many people are struggling with debt. Make sure that you analyze your situation and find the best debt payoff solutions to match your situation.