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Can we be car co-debtors?

(Duncan Alfreds, News24)
(Duncan Alfreds, News24)
A Fin24 user wants to know if you can get joint ownership on car finance. He writes:

Does vehicle financing offer joint ownership like when you apply for a bond?

What is the likelihood of receiving a better rate?

Are there disadvantages if one decides to go this route?

Rudolf Mahoney of WesBank responds:

The National Credit Act allows for a second party to sign as co-debtor on vehicle finance.

Both parties will then be equally liable for the repayment of the loan, but the car can only be registered in one party’s name, unlike a mortgage loan for a house, where more than one person can be registered as the owner.

This is not very common and less than 1% of all of WesBank’s transactions are financed in this way.

You usually find co-debtors when two people support one another financially and one party’s financial profile is not strong enough to repay the car loan.

Having a co-debtor does not improve the likelihood of getting a better interest rate.

The disadvantage arises in that both parties are equally liable for the loan balance, therefore should the principal debtor fail to make the payments, the bank will pursue the co-debtor and this will impact on both parties’ credit records.

Lastly, if both parties intend driving the car, you need to make sure that you are both insured to do so.

 - Fin24

Do you have a pressing financial question? Post it on our Money Clinic section and we will get an expert to answer your query. 

Disclaimer: Fin24 cannot be held liable for any investment decisions made based on the advice given by independent financial service providers. 

Under the ECT Act and to the fullest extent possible under the applicable law, Fin24 disclaims all responsibility or liability for any damages whatsoever resulting from the use of this site in any manner.



 
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