Generally, nobody gets thrown a car loan they didn\u2019t sign up for \u2014 even if you\u2019re named as the beneficiary in the will. But if you cosigned for the car, you\u2019ll be responsible for making repayments. If you don\u2019t assume a loan you\u2019re responsible for, you\u2019ll lose the car and your credit score could be hurt.<\/p>
In most cases, your relative\u2019s car loan goes through the following 4 stages after they die.<\/p>
After anyone dies, all of their assets and debts are combined into what is called their estate. The estate represents the deceased\u2019s net worth after death.<\/p>
Once the estate is established, the deceased\u2019s assets go through a legal process called probate. Probate involves distributing the assets and paying off debts that the deceased left behind.<\/p>
If the deceased had an estate plan, it should name an executor \u2014 someone who handles paying off their debts and distributing assets according to their will. Otherwise, a probate court names an administrator who is responsible for handling the probate process. Usually, the administrator is a spouse, common-law partner or the next of kin.<\/p>
During this stage, there are 3 scenarios that can happen:<\/p>
After the probate process is over, anyone who was named as responsible for paying off the loan takes over repayments. If the estate covers the debt or the car is repossessed, then nobody needs to assume the loan.<\/p>
How the loan gets paid can vary depending on factors like whether the owner had a cosigner, a life insurance policy or a beneficiary.<\/p>
Anyone with their name on the loan is responsible for covering repayments. This includes cosigners, co-borrowers and joint applicants. In fact, there\u2019s no need for probate to transfer the debt since the loan is already under your name. This is true even if you don\u2019t inherit the car.<\/p>
If you don\u2019t make repayments, the lender can repossess the car and even sue you for repayment if the sale doesn\u2019t cover the full cost.<\/p>