880 Walkers Line, Burlington, ON, L7N 2G2
My Garage

What happens to my car loan when I break up with my common law partner

What happens to my car loan when I break up with my common law partner

Before our Halton auto loans team dive into the topic of what happens to your car loan when you and your common-law partner break up, we need to state these suggestions are not legal advice.

Each province has its own laws in effect that you must abide by; the purpose of this conversation is to provide you with food for thought.

Important questions that require your attention

The first thing we need to find out is whether your name and the name of your spouse are on the registration of the vehicle.

If both names are there, then the vehicle is considered owned by both of you; a judge would need to weigh in on how the property would be dispersed if you both could not come to an understanding.

An important question is who is responsible for the car loan payment?

If it's only your name, then your partner is not legally obligated to repay the loan.

These items become particularly important as your financial situation will change drastically now that you are in the process of ending the relationship.

Do you have good credit?

Most couples apply for credit jointly, so you could have a situation where one person has great credit, and the other has average.

You need to start working on your individual credit score as soon as possible.

You will need a credit score to rent an apartment and, in this case, buy another car. If you are not sure what your credit score is, you could sign up with Koho and Credit Karma; both of these give you access to your credit report and score.

If your credit score is on the weak side, now would be a great time to work on rebuilding that score.

The secret to having a great credit score is to simply make your payments on time and reduce the amount of debt you are carrying; if you follow those golden rules, you can't go wrong.

Revamping your budget

Something that you will need to invest some time in is looking at your budget and figuring out how much cash you can allocate towards the new car payment.

You may be obligated to pay spousal and/or child support, which takes a bite out of your income.

Car loan providers will not approve a loan if your total debt exceeds forty percent of your pre-tax income.

Support payments fall under that category, so you need to take those amounts into account.

Where to get the right answers

The Internet is the first place you will look for answers, but there is no one reviewing the information being posted online to verify whether it is accurate.

Instead, you should consult your local car dealership and find out what car loan options work for your budget.

The dealership will also give you suggestions on how to improve your credit score, so you will always have access to the most competitive financing terms in Canada, whether you are single or living common law.

If you need help or advice on anything to do with auto loans in Halton, contact Car Nation Canada today, we can help!

Categories: News

Tags: ,