I co-signed for my sister car a couple years back. It was a leased car. And with leased cars you have to pay for all the damages you have caused. As a co signer am I the one responsible to pay for those damages that she caused?
When you co-signed, you accepted joint liability for the car (presumably because the lender didn't think your sister was sufficiently trustworthy on her own). If there are damages, the lender can come after either or both of you to pay for them. Since you were the financially responsible one, they're much more likely to come after you because it's a lot more likely that you have the money and a good credit score that you'd like to protect.
If your sister has the ability to pay the damages but isn't willing to pay them, you could potentially pay them and sue her in small claims court for reimbursement. But most of the time, if a lender won't lease someone a car, there is a reason for that. And that reason often makes the person judgement proof-- you can't get blood from a stone.
The co-signer is responsible for the payment, and paying it was the correct course of action on your part. As for getting your money back from your sister, that may be difficult, but I believe it's possible.
You did your sister a huge favor by helping her purchase a car. You did her an even bigger favor by giving her a loan for $3000 when she needed it in an emergency. One would hope that she would be thankful for this. If she doesn't have much money right now, involving the courts is not going to help you, and would make it less likely that she would want to pay you back even if she could.
If you still have any sort of relationship with her, my suggestions would be:
- Ask her to pay what she can, with some sort of minimum amount, perhaps $10-20 per week until she gets back on her feet.
- Can she help you with something to work off a portion of the debt? Perhaps running errands for you, cleaning, babysitting, etc.
I have experience with being on both sides of these options, and the best advice I can give is to be civil and stay on good terms, if possible.
Is a Co signer on a leased vehicle responsible for damages?
In general, yes.
You have the same obligation to maintain the car as the primary borrower. If the principal borrower fails to maintain and repair the car, you will have to pay, as it is a shared responsibility. If the car is not maintained, the leasing company will impose charges at the end of the lease. This can include excess wear and tear, such as damage to the interior and scratches and dings that aren't repaired.
If the primary borrower – and you – fail to pay the charges, it will affect both of your credit scores.
You'd have to read through all of your sister's lease legalese to verify that you didn't just drop $3,000 out of the kindness of your heart but odds are very high that you were in fact liable for the cost.
When our lease ended we lucked out with a wear-and-tear clause which stated that we're not responsible for up to $1,000 of excess wear-and-tear. The line item showed we used up $700 because the car needed new tires when we returned it. Three months before the lease ended I had to shell out a few hundred for new pads and rotors so I'll call it a wash.
You did the right thing by paying the $3,000 so that your credit doesn't get ruined but now you have the tricky task of how to proceed with getting the money back from your sister.
The presumable fact that your sister has paid all of the car payments during the lease is nothing short of amazing, to be honest. Many co-signers get hit a lot worse than $3,000; I'm not saying that this statistic validates what happened but it could have been much worse.