I co-signed a loan for my son to buy a car, and now he cannot make the payments. What happens now?

The loan amount for a car is often higher than the car’s actual value, because cars lose value over time. If the lender repossesses the car, they will sell it at a public auction. The sale is usually for less than the remaining loan balance. After the auction, you and your son will still owe the deficiency balance (the remaining loan amount after the auction proceeds). 

Because you cosigned the loan, you are jointly liable for the full loan balance. This means that the lender can get a judgment against you, your son, or both of you, for any amount still owed after the repossession and sale of the car. 

As cosigner, you are the guarantor. This means that if you pay part or all of the loan, you have the legal right to sue your son for reimbursement. However, most parents do not wish to sue their children, so in the end, the parent is the one who is negatively impacted. 

If you are worried about having a judgment against you, or want to know more about debt collection rights, you can find more information here: Debt Collection and Garnishment | LawHelp Minnesota