Legal Question in Credit and Debt Law in Illinois

Re: co sign

You are 100% liable for any loan that you co-sign. That is why the creditor has you co-sign. The person seeking credit who requires a co-signer is not considered credit worthy and the creditor wants someone on the hook who they can go after if the payments are not made.

Car loans are particularly bad for co-signers because of the laws governing repossession. If the son defaults on payments and you do not make them, the car will be repossessed. The car will then be sold at auction for a fraction of what is still owed on it. The creditor then sues you to recover the difference between the amount remaining on the debt minus the amount obtained at auction. Often, the deficiency amount is very close to amount of the initial loan if the buyer defaults shortly after purchasing the car.

You should not co-sign for a loan unless you are prepared to make all of the payments or willing to pay the entire debt in the event that the principal buyer defaults.