If I borrow money from someone, does that person have the legal right to take out a line of credit for the amount borrowed and pass fees and interest on to me?

I borrowed $1500 from my former boss to buy a car on the title of which he is listed as teh security interest holder. Does he have the legal right to go to a lender for a line of credit in the amount I owe him and pass those [ayments, feesand interest on to me? Or, do his rights include more than simply repossessing the vehicle?

Asked on June 26, 2012 under Bankruptcy Law, Oregon


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 8 years ago | Contributor

1) The person you borrowed from has no right to pass interest, fees, etc. onto you unless you had agreed to them--so if he had told, for example, prior to you borrowing the money that he would do  this and you agreed to borrow it anyway, that would be legal.

2) He would have no right to repossess the car unless you specifically gave him a security interest the car (used it as collateral). Since you apparently did, he would have the right to repossess the car. He could also sue you for any balance due if the car is not worth enough to satisfy the loan--for example, if you still have a remaining balance of $9,500 and the car's current blue book value is $8,500 at the time you default and he repossesses, he could sue you for the extra $1,000.

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