Louisiana Laws for Cosigning for a Car Loan

• A young family receives a key to a new car that the father may have helped purchase by cosigning the loan. Barry Austin Photography/Photodisc/Getty Images

  Cosigning for a car loan in Louisiana is much the same as cosigning for a loan in any state with one caveat that applies to all community property states: Your spouse or partner is equally as liable as the guarantor of the loan because of community property laws. Louisiana is one of nine states with community property laws (the others are Arizona, California, Idaho, Nevada, New Mexico, Texas, Washington, Wisconsin and Alaska).

Spousal Responsibility

• If you and your spouse divorce after cosigning a car loan for a third party, it doesn't absolve you of your responsibility as guarantor. Your portion of the loan guarantee goes with you as communal property. If your ex-spouse defaults on his role as guarantor, the entire burden could fall on you.

Cosigning and Credit

• As cosigner, if the loan owner is late in making payments, it will negatively affect your credit. It's even possible that the car payments may be very late before you are made aware of the default, which would have a greater negative impact on your credit rating. Also, just by cosigning, the loan will appear in your credit report and be factored into your credit score.

Other Ramifications

• Cosigners in most cases are responsible for late charges, penalties and legal fees associated with a default on the loan. You can be sued and a judgment (usually a lien) can be placed against your real property such as your home. Should a lien be placed against your home, in the most extreme cases a lender could force the sale of your property to satisfy the debt. In addition to damage to your credit in the case of a default, current lenders can raise interest rates on your existing loans and future lenders will take the debt into consideration should you apply for a loan. Unknown to most cosigners is that unless the loan is guaranteed, a lender can request payment from the cosigner at any time even if the debtor is not in default.