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Going through the legal requirements of divorce can be extremely stressful for the both the parties. All of us know that a legal separation has several financial implications, too. What many of us do not know is how a divorce decree may adversely affect your car loan. However, this does not hold good for auto loans that have been prior cosigned even if it has been taken from a sub-prime lender. The previously executed lending contract of the loan applicants who are cosigners for a car loan may see their lending contracts getting affected by the contents of the divorce decree.
In our long tenure in the finance market as a bad credit auto loan service provider, we have seen many consumers suffer from this type of situations. It is most important for the bad credit borrowers to know this because these are the people who may suffer the most from their divorce, as far as their auto loan contract is concerned. Valley Auto Loans specializes in providing easy and fast car loan facility for borrowers with less than perfect credit. Our efforts to help poor credit borrowers with their financial needs have earned us much respect and reputation in the lending fraternity.
Most of question we come across pertaining to this topic relate to ex partners. These questions generally come from a low credit borrower who qualified for a bad credit auto loan by cosigning with a spouse who has good credit history. Naturally, after the divorce decree, all such borrowers become solely responsible for their car loans. Things get rather complicated when the person responsible for making the monthly payments after the divorce decree stops doing so. Many cosigners are keen to find out if late payment or repossession may affect their credit score. Unfortunately, the answer is yes.
All lenders provide approvals for auto loans on the basis of information available in the applications. The loan agreement becomes a binding contract once the agreement is signed. This means that the lending company may still hold both parties individually and jointly responsible for matters relating to the loan contract. This applies even if a divorce decree has been issued by the court. In these cases, court documents are not considered to be relevant to the loan contract and the lender can hold both applicants responsible for the loan payment that are yet to be made.
Therefore, in case of vehicle repossession or late payments, both the cosigner and primary borrower run the risk of damage to their credit score. The lender may also decide to collect the remaining payments from any of the spouses.