Ontario man left holding the bag on $62,000 car loan after co-signing for a friend

Hard lesson to learn

For Brown, the predicament began about three years ago when he helped a friend purchase a vehicle because she was having trouble qualifying for a loan. The vehicle was a 2019 Ford Escape and the financing was $62,533.

Brown told CTV News that about a year later he found out that his friend’s ex-boyfriend had vandalized the vehicle to the extent that it was undriveable. So she stopped making the loan payments.

Now, Brown is totally responsible for the $700 monthly payments for a vehicle that has been sitting in an automotive garage for the past year.

“What’s the point of co-signing for somebody,” Brown told CTV. “My friend turned their back against me, how is that supposed to make anyone feel.”

According to MNP, Canada’s largest consumer insolvency firm, the act of co-signing a loan is easy but it’s also very risky.

“If the borrower defaults, the bank will look to you to pay back the loan.”

And this is where it can become tricky for people. MNP says that often people with good credit and little other debt end up filing for bankruptcy because they co-signed a loan and got into financial trouble.

And as Equifax points out: “Co-signing for someone is a significant commitment. So, don't fill out a credit application without having an in-depth financial discussion with the primary borrower. It's important to talk to the borrower about their ability to stay on top of their payments and to form a plan in case they fall behind on their financial obligations.”

If faced with a situation like Brown’s, your first step is seeing if you can have your name removed from the loan. But the Financial and Consumer Services Commission of New Brunswick says it can be challenging to remove your name as a co-signer from an existing loan.

“The primary borrower would need to qualify for refinancing or pay off the loan entirely to release you from the loan.”

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The issues with co-signing on a loan

Equifax says co-signing a loan may impact a person’s finances in several ways as that person takes on the same financial risk as the primary borrower.

First and foremost, it could increase their debt-to-income ratio which could impact their ability to qualify for their own additional credit. Your credit score could be affected with any late or missed payments.

The biggest impact for a co-signer is being responsible for the payment of a loan if the primary borrower misses a payment.

“Co-signing has the potential to put stress on your relationship with the primary borrower, who is often times a friend or family member. Your finances are tied to theirs for the length of the loan, even if your personal relationship changes,” adds Equifax.

There are several alternatives to taking the step and co-signing a loan for another primary borrower whether it’s for a vehicle or a home. Those include helping out with a downpayment or lending the primary borrower your own money.

So maybe you'd rather not co-sign for someone, but you still want to help. Here are some alternatives to helping someone without agreeing to be responsible for the repayment of a loan.

Fidelity says out that people can help a primary borrower find another loan source.

“Just because one lender requires a co-signer does not mean that all of them will. Each lender will have its own lending requirements. And sometimes it's worth taking the time to shop around a little.”

Sources

1. CTV News: Ontario man on the hook for $62K after friend stops paying monthly car payments (March 12, 2025)

2. MNP: Co-Signers, Beware! (December 13, 2016)

3. Equifax: What is a Co-Signer?

4. Financial and Consumer Services Commission of New Brunswick: What you should know before co-signing a loan

5. Fidelity: Asked to co-sign? What to know before co-signing a mortgage or loan