QUESTION
If a person is recently deceased and has a car loan is his name only and you continue to make the car payment until the vehicle?
Asked on Feb 09th, 2013 on Estate Planning - California
More details to this question:
To keep from refinancing the vehicle for a longer period and higher interest rate. If the payments are being made, would the bank let you continue do this or can they force to change the loan?
11 ANSWERS
Real Property Attorney serving Utica, MI
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Douglas A. Tull, P.C. Attorney at Law
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No - "death" is a "default" under the terms of most car financing agreements - so the balance is due anyway - and you need to keep the vehicle insured under most such financing arrangements - there are other reasons why it does not make sense to do so - without the bank's blessing - one of them is insurance - if the owner is deceased, I doubt that coverage under the car insurance would continue for heirs. That said, some banks are allowing surviving spouses and heirs to continue making payments - rather than having to take the car back and suffer a loss - so perhaps the best approach is the direct approach - inquire of the bank and see what they say - if they say no, you can't make the payments - then maybe your option is to simply turn the vehicle in - and let them worry about being paid if the vehicle is worth less than is owed.
Answered on Feb 13th, 2013 at 6:34 PM
Probate Attorney serving Newport, OR
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Minor, Bandonis & Haggerty P.C.
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Yes to both questions; usually, if payments continue to be made, the lender will continue to accept them and be happy. However, death is probably a default in the loan, and the lender has the right to call the loan or exercise any other right it has on default. Plus, do you really want to continue to make payments on a vehicle you don't own? Will you inherit it eventually? Is there a probate estate (estate should make the payments)? Can you get insurance on the vehicle?
Answered on Feb 12th, 2013 at 2:59 PM
Thomas Edward Gates
They cannot not accelerate the loan. But, upon payoff, the title will only be in the deceased name.
Answered on Feb 12th, 2013 at 2:59 PM
2 Awards
It depends on the bank. With a vehicle and potential liability and loss, most banks do not allow this.
Answered on Feb 12th, 2013 at 2:58 PM
Jeffrey W. Wilkinson
The bank can require you to refinance. However, as long as the payments are made it may not be an issue except in regard to insurance. You need to make sure you have the vehicle insured under your name and the bank to be named as an additional insured. Are you certain the interest rate will be higher. Interest is at all time lows?
Answered on Feb 12th, 2013 at 2:58 PM
Appellate Attorney serving Grosse Pointe Farms, MI
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Musilli Brennan Associates, PLLC
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The car has to be transferred, it is part of the deceased estate, as is the remaining debt which secures it. The issues with the bank are a contract with the deceased.
Answered on Feb 12th, 2013 at 2:52 PM
Business Planning Attorney serving Livonia, MI
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Frederick & Frederick Attorneys at Law
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They are probably within their rights to force a change. There are other issues, however. You need to register the vehicle. Whether you can do that without paying off the loan is an issue. Insurance may also be a problem. If the vehicle is insured in the decedent's name, then the insurance company will balk at paying, if there is a claim. If and when the loan is repaid, the lender will issue a release to the decedent. How that would apply to the new owner is also problematic. If you can get around these issues, then the main issue is getting the vehicle retitled. If there is no probate estate and if the person in question is an heir, there is a simplified process. If not, it can be very complicated, and probate would be required.
Answered on Feb 12th, 2013 at 2:51 PM
Estate Planning Attorney serving Wilmington, DE
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Reger Rizzo & Darnall, LLP
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I do not think the bank will care as long as someone is paying the loan. Depending on the value of the car and if there are other debts, you must be careful, though, because there is an order of preference for paying debts and expenses in an estate.
Answered on Feb 12th, 2013 at 2:51 PM
3 Awards
You do not own the vehicle, so it is not a good idea to do that.
Answered on Feb 12th, 2013 at 2:50 PM
The Bank can call the loan and force you to refinance it.
Answered on Feb 12th, 2013 at 2:49 PM
Trusts Attorney serving Sacramento, CA
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Law Office of Victor Waid
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You need to consult the lender who financed the car purchase.
Answered on Feb 12th, 2013 at 2:49 PM