How do I release myself from liability after signing for an auto loan?

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How do I release myself from liability after signing for an auto loan?

I am trying to help a friend out by buying his truck that he lost to repossession. I took out the 12k loan for the purchase. The truck has not yet been registered/plated with CO DMV. I would like to keep an interest in the vehiclein the event that he does not fulfill his end of the deal. The temporary registration from the dealer has onlymy name on it. What does this means for ownership, insurance and liability. How do I remove myself from liability and keep interest in the truck?

Asked on May 13, 2011 under Bankruptcy Law, Colorado

Answers:

M.T.G., Member, New York Bar / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

I can understand your concerns here and you are quite right to want to protect yourself.  The loan for the vehicle: is it a car loan or is it a personal loan?  That will matter here and the terms of the loan will matter as well.  The only way that I can see your really stepping away form anything that could happen would be for you to sell the vehicle to your friend and have a loan agreement drawn up - and I mean by an attorney and not on the back of a napkin - whereby he pays you for the loan and you keep the same security interest in the vehicle that a car loan lender would.  But your loan - if it is a car loan - will most likely preclude you from transferring the title until it is paid off.  The lender is probably om the title as well, correct?  Then the title is not clear for transfer.  If you remain on the title you remain the owner and you are liable for injury and damage in an accident.  Go and seek some legal consultation and bring the paperwork with you.  Good luck.


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