What Are My Responsibilities as a Cosigner on a Car Lease?

What Are My Responsibilities as a Cosigner on a Car Lease?
••• Prostock-Studio/iStock/GettyImages

As a cosigner on a car lease, you and the other applicant are equally responsible for all of the terms of the lease, as well as other local, state and federal laws regarding the operation and use of the vehicle, explains the U.S. Consumer Financial Protection Bureau. For example, if the other signer does not keep the insurance on the car current, you must make sure the car is insured as required by the leasing company and your state.

You also have the same responsibility for making payments. If the other lease signer doesn't make his payments on time, or misses payments entirely, each of your credit reports will show late payments, advises Experian, one of the three credit-rating bureaus.

You might have specific limited rights to use the car, depending on your agreement with your cosigner. When you cosign for a car purchase, you do not own it or have your name on the title, depending on your state.

Duration of a Vehicle Lease

When you enter the lease agreement as a cosigner, you are responsible during the entire period of the lease of the car. In some instances, you may remove your name from the agreement, but your cosigner, as well as the finance and leasing companies must agree to this. If the primary driver fails or refuses to pay, you should start paying to avoid damaging your credit score.

Cosigners on leases should agree to give each equal access to all paperwork associated with the lease, and be allowed to check the status of payments.

Maintenance of the Car

You have the same obligation to maintain the car as the primary borrower. If the principal borrower fails to maintain and repair the car, you will have to pay, as it is a shared responsibility. If the car is not maintained, the leasing company will impose charges at the end of the lease. This can include excess wear and tear, such as damage to the interior and scratches and dings that aren't repaired.

If the primary borrower – and you – fail to pay the charges, it will affect both of your credit scores.

What Recourse Do You Have?

A third party can be used to pay off the debt when the primary and the secondary borrowers fail to pay. You and the primary borrower can use a debt-consolidating company that will take on the risk of paying the loan.

The car will still be in the name of the primary borrower, as well as in your name as the cosigner. The leasing company holds the title, so you cannot repossess the car if the primary borrower fails to make payments.

You can arrange with the primary borrower to take over the lease, but the leasing and finance companies must also agree. If you as the cosigner are unable to make a current payment on the lease, inquire if the finance company offers a forbearance. If so, this may provide you with a temporary reprieve for a month or two.

The Mileage Limit

The vehicle must be driven within the stipulated mileage in the lease agreement or you'll need to pay extra money to cover those extra miles. If the primary borrower exceeds the mileage and fails to pay, you as the cosigner will be responsible for any extra charges. The over-mileage fees will be posted on your credit reports if you don't pay, and may adversely affect your credit score.