I'm in a bit of a sticky/confusing situation and I am unsure of what my options are.
My fiancé has a car that was financed through Ally bank. His father, who I'll refer to as John, co-signed for the car. The car title, I believe, is in John's name, as well as the insurance. (John did not list my fiancé as a driver on the vehicle at all, neither primary or additional)
My fiancé is currently living in England for school without a job so I have taken over his insurance payments and car payments.
I was originally giving John $500, in cash, on the first of each month. But after several months, I found out that the car itself was $369 and the insurance was only $71. Which meant that John was pocketing $60 every month. I didn't like being taken advantage of so I setup a separate account with Ally bank to pay directly. (I was able to do this by having my fiancé call in since he is also on the loan)
John had missed several payments and made only partial payments to Ally bank, which means that I now have to pay the late fees and past balances, even though I've already given him full payment plus the $60 that he has been over charging. I then told John that I was aware that he was over charging us and I did not want to pay through him anymore. After some arguing, John called his insurance agent to authorize me as a payer of my Fiancé's car, that my Fiancé has apparently never been a driver on.
John told me that he had paid November's insurance in advance and said that I needed to reimburse him for the month of November. I did such, but for the actual cost, which is $71.
So today John's agent informs me that he actually did not pay for November and that it was actually a month behind so now that I'm billed directly, I will have to pay for this month plus the last month.
So I stopped the check, which has made John pretty upset. John says that I have until this Friday to refinance the car or else he will tell Ally that he is forfeiting the car. (He also has the spare key in a locked safe, so he is also threatening to take the car)
So my only question is, how can my fiancé get out of this situation without destroying his credit?
I am curious what the outcome would be if we just give the car back to John and just stop paying for it altogether.
If possible I would gladly give the car back to John and let him deal with it. But only if my fiancé's credit score would not be impacted. I don't know much about this stuff so if there are other opportunities here please let me know! If there is a way that I could force him to sign over the title, then I think that would solve the problem of him being able to take or forfeit the car.
Thanks in advance