What happens to auto loans when the borrower dies?

If you were to die, is there anyone responsible for your auto loan? Auto loans could create problems for the surviving family members. Non-payment of an auto loan could result in confiscating the vehicle.

We know that if there is a co-signer for the auto loan, he or she will be responsible for paying off the remainder of the loan. If you are the spouse and live in a community property state, you may be responsible for the payment of the remaining loan balance even if you did not co-sign the loan.

Of course, the heirs may return the vehicle and the lender will gladly take the vehicle back. One drawback will be that if the lender sells the vehicle for less than the remaining loan balance, they may try to get the balance from heirs. Auto loans with no co-sign and spouses, heirs may have few options. Children of the person with the loan may be able to pay-off the loan but may be subject to immediate payoff of the balance. In order to get the vehicle ownership, they may have to jump through many more steps too. Some lenders may allow heirs to assume the loan and continue to make monthly payment until the loan is paid off.

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