My Co-Borrower Is Furloughed, What Happens to Our Car Loan?

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Meghan Carbary has been writing professionally for nearly 20 years. A published journalist in three states, Meghan honed her skills as a feature writer and sports editor. She has now expanded her skill-set into the automotive industry as a content writer for Auto Credit Express, where she contributes to several automotive and auto finance blogs.


, - April 9, 2020

When you have a co-borrower on a car loan, you might wonder what happens if one or the other of you is furloughed, or temporarily laid off, from a job. In most cases, as long as one of you can pay, nothing changes. However, it may still be a good idea to contact your lender for options.

How a Co-Borrower Affects Your Car Loan

When your income isn’t enough to qualify for an auto loan on your own, adding a co-borrower could help. A co-borrower, also called a joint applicant, is someone that signs a car loan with you in order to help you get approved. Lenders can combine your income with your co-borrower's if they're your spouse, which can help certain applicants meet the requirements for a loan.

Even though co-borrowers are typically used to help you meet the income qualification, they can help with other areas as well. Adding a co-borrower with better credit may help you qualify for a loan with a better interest rate than you may have otherwise received.

Additionally, keep in mind that, with the exception of income, both you and your co-borrower must individually meet the lender requirements for financing.

How a Furlough Affects an Auto Loan

A furlough, or a temporary layoff or leave of absence, is something that’s been happening more frequently around the U.S. due to the coronavirus pandemic. Many people who haven’t experienced anything like this before are figuring out what it means for them and their financial obligations.

If you’re a co-owner of a vehicle, and your co-borrower is furloughed, nothing is going to happen to your auto loan as long as you’re able to make the payment. However, if you’re unable to pick up the slack, the first thing you should do is talk to the lender. In fact, if possible, both you and your co-borrower should speak with the lender to let them know what’s going on.

Defaulting on a car loan is never good, but if you stop making payments, it’s bound to happen. Since defaulting typically means your vehicle gets repossessed, your lender may want to avoid this as much as you do – a repo costs them money, too.

Due to the large number of people facing financial uncertainty right now due to COVID-19, many lenders are finding ways to assist their borrowers. Some lenders are doing things like moving payment dates and deferring payments for 60, 90, or even 120 days. There may be even more your lender is willing to do for you, but you can’t know for sure until you contact them.

If the primary borrower on a joint auto loan is laid off, the same rules apply. First, see if the co-borrower can make the payment, and if not, talk to your lender. Even if they’re unable to help right now, at least they know the situation and are aware that you’re not defaulting willingly. Sometimes, communication can be the key to keeping the car your love.

Unable to Get Help With Your Payment?

If you and your co-borrower aren’t able to get the help you need to keep your current auto loan, it might be time to trade in for something more affordable. With your co-borrower furloughed, it may not seem possible to get the car loan you need, but at CarsDirect, we know that there are lenders out there willing to help people that are struggling through these unique and trying times.

We want to get you in touch with a dealer that has lenders that offer bad credit auto loans. We’re teamed up with a large network of dealerships all across the country, and are working to keep you in touch with dealers that are still open during the coronavirus pandemic.

To get connected to a dealership near you, fill out our fast and free car loan request form, and we’ll do the searching for you.

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Meghan Carbary has been writing professionally for nearly 20 years. A published journalist in three states, Meghan honed her skills as a feature writer and sports editor. She has now expanded her skill-set into the automotive industry as a content writer for Auto Credit Express, where she contributes to several automotive and auto finance blogs.


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