My husband and I did a really stupid thing: We co-signed for our 20-year-old daughter’s truck.
We did this in July 2021. We shook hands in a “gentleman’s deal” on the condition that she live at home until 2022 to figure out her actual income versus outgoing money.
She has a job that can pay for her to live on her own with no problems financially. We were concerned because of her lack of life experience. She went straight from homeschooling into this job. She moved out without our consent or approval.
We are on bad terms at this point. We want my husband’s name off the loan OR the truck back. We’ll assume payments plus pay her back her deposit. It’s hard knowing you’re potentially responsible for something if things go awry. We are on such disgruntled terms that we don’t even know where she lives or her cell number.
-Serves Me Right
Dear Serves Me Right,
I don’t think co-signing was your foolish move here. Co-signing tends to end poorly when the person you sign for has terrible credit or insufficient income. Your daughter obviously has a good job if she can already afford to pay all her expenses. But at 20, she probably lacked the credit history to get an auto loan on her own without paying an exorbitant interest rate.
Your mistake is that you made the co-signing contingent on her living at home until 2022. Of course, your daughter shouldn’t have agreed to something she didn’t intend to do. But she’s an adult. She doesn’t need your consent or approval to move out.
Your requirement doesn’t actually seem to be about money. She doesn’t need to live at home until 2022 to “figure out her actual income versus outgoing money” if she can already afford to have her own place and pay all the bills.
What I suspect is that this is about control. You don’t want to accept that your daughter is an independent adult. You may be right that she lacks life experience. But the only way she’ll get it is by flying the coop. Do you really think your daughter will gain worldliness by living with her parents for another year?
But let’s put family dynamics aside for a minute. Your options for getting out of a loan you’ve co-signed are limited.
You could request a co-signer release from the lender. But both your daughter and the lender would have to sign off. You could also ask your daughter to apply to refinance in her name. But you’d probably have to wait at least a year or two until your daughter has built a solid payment history and credit score for a lender to even consider either option.
You could take back the truck and take over payments, as you suggest. But that’s only an option if your daughter is willing to sign over the title to you.
Notice a common theme here? All of your options require your daughter’s cooperation. You have no chance of getting that if you’re not on speaking terms. The important thing here is that your message can’t be about the car loan or her decision to move out. Simply say that you love her and miss her. Ask her if she’d be open to talking.
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If you can re-establish a relationship, I don’t think you should ask her to sign over the truck or petition to get your husband’s name off of it, provided she’s making the payments on time. If she can handle adult responsibilities, treat her like the adult that she is. You don’t have to agree with all her choices in life.
If she isn’t paying, obviously, that’s a different story. The relationship will be harder to repair — and in that case, there’s no way your husband’s name is coming off that loan. As the co-signer, he can ask the lender to send him monthly statements to make sure the loan is paid as agreed. If it isn’t, unfortunately, the only way to avoid damaging his credit will be to make the payments on his own.
I hope that having a relationship with your child is motivation enough for the two of you to extend an olive branch. I don’t think this is really about a truck loan. But if I’m wrong and it really is about the loan, the olive branch is still your only solution.
Robin Hartill is a certified financial planner and a senior writer at The Penny Hoarder. Send your tricky money questions to AskPenny@thepennyhoarder.com.