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What happens to a car loan if the borrower dies?
My father is in poor health and made me his power of attorney. I noticed that he still has an $8,500 balance on his car loan. What happens to the loan if he passes away?
Eric Schad · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
Sorry to hear about your father’s health. It’s never an easy situation, but hopefully, this information will help you understand your options.
Unlike some other types of debt,
car loans
are not forgiven if the borrower dies. Instead, the debt goes to the person’s estate. Then, the executor of the estate can decide what to do with the vehicle.Generally speaking, the estate can liquidate (sell) the car to pay for the debt and keep the proceeds. However, if you have an interest in keeping the car, that’s a possibility. This issue may have to go through probate court, so expect a few months before it’s settled. Alternatively, you can ask your father to put the car in his will to you, which can circumnavigate the issues and time associated with the probate court.
In the meantime, you would have to keep up with payments on the car loan to avoid defaulting or repossession.
If you decide to keep the vehicle, make sure you get the right car insurance for your needs. Sign up for the
Jerry
app to compare quotes and get the best rate for your car insurance needs.View full answer
- Gregory R.
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