I married a deadbeat – does that mean I can’t get a car loan?

By Sharon Harvey, Esq.

In Pennsylvania the Courts have interpreted the terms of the Equal Credit Opportunity Credit Act (“ECOA”) particularly the provisions of Regulation B, have held that a bank may not discriminate against creditors by virtue of their marital status.  Under ECOA, a bank may not have a blanket policy that married individuals must both sign onto loan agreements, particularly where the married individuals do not present themselves as joint applicants.  Generally, where the credit of one individual is sufficient to qualify for the loan approval, a bank may not require the spouse of that individual to sign the loan.  Only where the bank would not have approved the loan, but for the signature of the spouse or another applicant, is the bank permitted to require the additional signature of the spouse. 

The general rule is that where a married person seeks individual credit and is individually creditworthy, a lender violates the ECOA, if it nevertheless enforces a blanket policy to require a spousal signature.  On the other hand, the lender does not violate the ECOA where the spouses present themselves as joint applicants, or where the credit seeker is not individually creditworthy absent a spousal signature.  Southwestern PA Regional Council, Inc. v. Gentile, 2001 Pa. Super 183, 776 A.2d 276 (2001). 

The ECOA generally provides that it is unlawful “for any creditor to discriminate against any [credit] applicant with respect to any aspect of a credit transaction on the basis of . . . marital status.”  15 U.S.C.  § 1691(a)(1).  Silverman v. Eastrich Multiple Investor Fund, L.P., 51 F.3d 28, 30 (3d Cir. Pa. 1995).  Regulation B provides in relevant part, “Except as provided in this paragraph, a creditor shall not require the signature of an applicant's spouse or other person, other than a joint applicant, on any credit instrument if the applicant qualifies under the creditor's standards of creditworthiness for the amount and terms of the credit requested.12 C.F.R. § 202.7(d).”  Id. at 30.

A bank can ask a spouse to co-sign a loan if, “If, under a creditors standards of creditworthiness, the personal liability of an additional party is necessary to support the credit requested, a creditor may request a co-signor, guarantor, endorser, or similar party.  See 12 C.F.R. § 202.7(d)(5) .

The applicant’s spouse may serve as an additional party, but the creditor shall not require that the spouse be the additional party, so the spouse who is seeking the loan can ask a parent, a sibling or a friend to be a co-signor, if necessary.  A bank may not require a spouse to sign for a loan agreement and the applicant should be given the option of having another creditworthy co-applicant if the applicant does not qualify for the financing on his/her own.