how to construct a binding contract with a friend?

Question

recently co-signed for a car for a friend of mine. I believe that she will pay the car note on time each month but to be on the safe side I want to create a contract. What information / key points should I include in the contract? ( I am going to request that she remove my name from the title after 10- 12 months of non late payments)

Answer 1

You've already signed it when you co-signed for the loan. Getting off the loan early will be entirely up to the lender, not your friend. Lenders don't usually do that though -- why should they? It's not in their interest to do so and unless your friend's credit was just barely into "co-signor territory" her credit isn't likely to improve enough that the lender will entertain your request for removal. Go ahead and ask once the loan is a year old, but don't hold your breath.

There's no contract that you can enter in to with her that will change the terms of the agreement you signed with the bank. You automatically have the right to go after her for your losses if she defaults on the loan and you get stuck with it.

Whatever you do, do NOT allow your name to be taken off the title until the loan is paid in full! It's your only recourse if she defaults on the loan in most cases. You'd be stuck with the debt, but at least you'd have an ownership interest in the car and could take possession of it.

Answer 2

Doesn't matter what you decide after the fact, or agree on, the controlling document is what you co-signed. She can't take your name off after anything but the final payment, and if she misses a payment they will be coming after you.

Even if the loan company agreed to take your name off the title, you are still responsible for the amount of the loan if she doesn't pay, and all that would happen is you would have no claim on the vehicle should that happen.

Either you do, or don't trust her, and if you don't, it's too late now. Forget about binding contracts, there is already one in place.

Answer 3

I would have created the contract before i even co-signed on the vehicle, but in this case you need to make it clear that the payments need to be made are done so in a timely manner to prevent any penalties against yourself. You also need to make clear deadlines on how long the contract is in effect as well as any other stipulations that may cause problems for either party signing the contract. Also copies of the signed contract need to be dated and signed. Lastly make sure that the contract is in a safe place in case of an incident where it is needed i.e. COURT! i know my answer isnt much help but its a step in the right direction it mostly depends on what your state laws require in a legaly binding contract check online or with someone who practices law.

Answer 4

I think if you already signed it, it's too late. The only option now would be for her to sell the car and pay the loan in full (on time); otherwise, no matter what she does it could affect your credit. If you need the protection of a contract, you shouldn't have cosigned.

Answer 5

Its a little late to assume your friend will sign a contract to your liking, however if the two of you spoke of the terms you mentioned, I would jot them down, and present it to her for her signature and date in front of a witness that will sign, preferably a notary public such as at the bank where you got financing. Verbal contracts are legitimate however you would have to prove what she agreed to.

Answer 6

Not sure,but getting contract notarized with your signature along with your friends would probably help.
I personally make it a rule never to mix business transactions with friends. Have been burned in the past. By my best friend.

Good luck!

Answer 7

However you word it and what you agree to make sure both copies are notarized.
For the contract you may go to your local stationary and print shop to see if they might have a generalized one...even ask there if they notarize. Your bank does...