Personal Finance

Auto lease guarantor protection

  • Last Updated:
  • Dec 21st, 2017 9:33 am
[OP]
Member
Jun 23, 2010
270 posts
138 upvotes
North York

Auto lease guarantor protection

I'm looking for advice. I agreed to a guarantor for an auto lease for a family friend, but have not signed papers yet. The lessee is very likely to not have issues paying the lease. I would like to have protection in worse case scenarios (major illness, etc). Is there some kind of contract I can sign with the lessee to reduce my risk?

Thanks!
9 replies
Deal Addict
User avatar
Dec 8, 2007
4789 posts
930 upvotes
Lender won't care. You sign, they go after you both if there is a default. What you arrange between yourself and the Borrower/Owner is up to you - that's something for you two to work out between yourselves, likely in small claims court. The Lender won't care. Knock knock, where's the money.
Mark77 wrote:"All aspiring students should go into the financial services - engineering is, and always has been, a poor choice for our brightest minds ... and TodayHello is my Hero ..."
Hydropwnics wrote:"TodayHello is a certified hustler and original gangster."
[OP]
Member
Jun 23, 2010
270 posts
138 upvotes
North York
TodayHello wrote:
Dec 20th, 2017 11:01 am
Lender won't care. You sign, they go after you both if there is a default. What you arrange between yourself and the Borrower/Owner is up to you - that's something for you two to work out between yourselves, likely in small claims court. The Lender won't care. Knock knock, where's the money.
That's what I was thinking. Is it possible/legal to sign a side deed with the lessee so that I can collect the money from the lessee (with interest) if the lessee fails to pay and I end up paying?
Deal Addict
User avatar
Dec 12, 2006
4260 posts
470 upvotes
Barrys Bay
nonfatalexec wrote:
Dec 20th, 2017 10:02 am
I'm looking for advice. I agreed to a guarantor for an auto lease for a family friend, but have not signed papers yet. The lessee is very likely to not have issues paying the lease. I would like to have protection in worse case scenarios (major illness, etc). Is there some kind of contract I can sign with the lessee to reduce my risk?

Thanks!
DON'T Sign. You have no protection.

Tell person to improve there situation, or look at cheaper vehicle.
Deal Addict
Jan 15, 2017
2154 posts
1483 upvotes
Why does your friend need a guarantor? What happened that he cannot get the vehicle by himself? Why is he looking for a lease for a new vehicle and not purchasing a cheaper used vehicle? What makes you think that he will make all the payments?

Do you understand that by cosigning the lease that you are responsible for it? Should your friend be late with a pmt for easy reason or stop paying that you will be legally obligated to make the pmts? Why your friend isn't making pmts is irrelevant to the leasing company - you guaranteed the lease and they will call you. I mentioned this as having dealt with co-signors in the past, whenever I called them for collections they always felt that I shouldn't be calling them as it wasn't their problem. My advice - before you co-sign, make sure you fully understand what your legal obligations will be.

Also, the lease will report and show as a debt to your credit report. This can possibly affect your ability to borrow in the future. This also means that the pmt history of the lease will also be reported to your credit report. Any late or missed pmts will be reported and will negatively affect your credit score.
[OP]
Member
Jun 23, 2010
270 posts
138 upvotes
North York
My family friend is here on a study permit with parents overseas and study permits forbid working. She's going to accept the transfer of a lease that's in the middle of a lease.

I'm aware that being a guarantor for a lease will hurt my credit ratings if she's late or misses a payment.

I'm leaning towards breaking the verbal agreement and not signing.
[OP]
Member
Jun 23, 2010
270 posts
138 upvotes
North York
I just found out the lease is ending in September 2018. I will suggest her to buy out the vehicle lease instead.

http://autoleasebreakers.com/blog/faqs/ ... e-buy-car/
The second option is instead of taking over the lease for the remainder of the lease agreement term, simply buy out the lease so you own the vehicle. There may be advantages to this when you consider if the person seeking to swap their lease may have originally dropped a solid down payment at the beginning of the lease contract to being down their monthly lease payments. As someone considering to take over a car lease for a lease buy out, you may benefit from this down payment and get into the car for much less.
Deal Fanatic
User avatar
Dec 27, 2009
6492 posts
3667 upvotes
Ottawa, ON
No there isn't anything you can do to protect yourself. The whole point of being a guarantor is that the lender can come after you in case of default. Just don't do it is my advice.
Deal Addict
Aug 20, 2007
1846 posts
599 upvotes
Kitchener
OP.. you can sign a side agreement if you want but my question to you is this. What makes you think that if your friend defaults and the lessor comes after you for the money... that your friend will all of a sudden be able to pay you?? Its not a logical.
[OP]
Member
Jun 23, 2010
270 posts
138 upvotes
North York
peelhic wrote:
Dec 20th, 2017 9:32 pm
OP.. you can sign a side agreement if you want but my question to you is this. What makes you think that if your friend defaults and the lessor comes after you for the money... that your friend will all of a sudden be able to pay you?? Its not a logical.
You have a very good point. I'm going to pull out of the verbal agreement and not sign as a guarantor.

Top