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Apply for a joint auto loan or get out of a joint auto loan after divorce so your spouse will be responsible for making car payments.
Important things to know about divorce decrees and credit. A divorce decree can endanger credit, and joint debts remain joint debts. Re-assigning debt in divorce decrees does not relieve a spouse of debt responsibility.
Joint auto loan: Need to get out of a joint auto loan? First, try to sell the car. Make sure the sale occurs before the divorce. If you just have an agreement to sell, you are responsible for the payments and your credit is in jeopardy. If the car is still has payments due, it's better to sell the car at a loss than risk your credit. The difference between good and bad credit can be worth thousands of dollars in interest and fees per year on future financing. Second option is to have one spouse refinance the car in his/her own name. If one spouse is to keep the car after the divorce, before you get divorced, insist that your soon-to-be-ex obtain new financing in his/her own name. You can't just call up the car finance company and ask for one or the other to be removed from the loan. Your bank is going to insist on having him or her go through the formal loan process to qualify. If he/she is not able to qualify for financing on his/her own, maybe his/her relative can co-sign for them? Don't take your name off the title. If you take your name off of title, you are removing ownership but not loan responsibility, a very dangerous situation to be in. Yes, this means that you will not be able to split the equity in the car at the present time. Place a limit on how long your ex can have possession of the car before it has to be sold or refinanced. Notify the car finance company of your change of address and have all statements sent to your new address. At the very least, inform them that you wish to be notified if the payments get in arrears. In this way, if your ex is late on payments, you will be notified and you can get the chance to make up the payments.
Read our article about joint credit, or locate other auto loan articles.
More marriage and divorce credit articles for: joint mortgage loan joint auto loan joint credit cards
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