We have a parent that is going to borrow money to buy their child an automobile and they want to pledge the child's C. D. but the child will not be signing the note. We are in the State of Georgia. The C. D. is set up in the child's name POD to the parent. Can this C. D. be pledged for the loan if the child does not sign the note? Would we need to get a hypothecation signed by the child (teenager)?

Thanks

I would say no. Parent loan = parent must at least be co-owner of collateral (CD). If the CD was co-owned (not POD), then parent could take the loan with hypothecation signed by kid. Maybe you can break the CD at no penalty, retitle as joint ownership, and at the same time sturcture the CD term to match the loan term. Also, just an opinion, but it is never a good idea to allow a Cd as collateral for a loan when there is a beneficiary listed. We make them remove the beneficiary is they want to use CD as collateral.