A Seattle woman sought advice from financial guru Dave Ramsey on “The Ramsey Show” after finding herself on the hook for a co-signed car loan that her ex-partner failed to repay. Mary, a 60-year-old woman earning $61,000 annually with no savings and $3,000 in credit card debt, shared her story with Ramsey. She revealed that she had co-signed a loan for a 2019 Volkswagen Jetta for her then-boyfriend, who eventually could not make the payments, leading to a voluntary repossession with a remaining balance of $29,000.
Mary explained that she co-signed the loan in the fall of 2021, believing in her partner’s ability to make timely payments. However, after their relationship ended, she found herself in a financial predicament as the lender was still pursuing the outstanding debt. Ramsey cautioned Mary that in co-signing a loan, she essentially becomes the borrower if the primary borrower defaults on payments.
Mary wondered if she could place a lien on her ex-partner’s settlement from a motorcycle accident to cover the remaining Jetta balance. She also mentioned that she co-signed his Harley, which was paid off, and had text messages where he promised to cover the debt. However, Ramsey advised against relying on someone else’s settlement as a solution to her financial woes, emphasizing that waiting on external sources of money was not a sustainable strategy.
Ramsey further explained that vehicles often sold at auction for less than the remaining loan balance, resulting in a deficit that the lenders would seek to recover from the co-signer. He recommended that Mary inform the creditors of her financial constraints and direct them to the ex-partner, who was anticipating a settlement. If this approach did not yield results, Ramsey suggested negotiating a settlement for the repossession balance, which could potentially be less than the total amount owed.
In conclusion, Mary learned valuable lessons about the risks of co-signing loans and the importance of financial independence. Ramsey’s guidance highlighted the pitfalls of relying on others for financial security and underscored the need for proactive debt management strategies. By taking proactive steps to address her debt situation, Mary could navigate the challenges posed by the co-signed car loan and work towards financial stability.
