I have some questions about co-signing a car loan.
My credit score and income are well above what I need to get a car loan. However, my sister has poor credit, and is looking for ways to boost it.
I'm buying a car for myself, and was planning on getting a loan to finance it.
1. Do you think the car dealership would allow her to co-sign my loan?
2. If so, would this help her build credit like I think it would?
3. Assuming I make all of my payments in full and on time, do you see any ways where this scenario would impact my credit or her credit in a negative way?
Wed Dec 03, 2014 11:31 pm
oldguy Senior Member
Cash: $ 714.80
Joined: 21 May 2006
Don't do that to your sister, if anything happened to you (a car wreck, eg) your sister would be stuck with the car payments, the lawsuits, the whole mess.
But, no, a dealer won't allow your sister to co-sign, you are qualified for the loan - why would the lender want to list extra people that have to be contacted in case of a default?
Thu Dec 04, 2014 12:09 am
Wino Senior Member
Cash: $ 113.80
Joined: 03 Aug 2012
Of course the dealer will allow it. If you don't pay, he still has someone else to chase, giving him better odds of getting his money (and fees... there are always fees).
But I agree with oldguy that this is a bad idea. Cosigners are never a good idea for anything. If she has bad credit and wants to improve her credit, a secured credit card with ZERO fees is the way to do it. Basically, she puts money in, then uses it like a credit card, "paying" the bills as she goes.
There is no need whatsoever to have a credit score, once you have enough money saved. I don't recommend someone who is basically broke to have a zero credit score. The reason for this is that most States allow insurance companies to charge more for people with low or no credit. It can also be difficult to get an apartment lease, a cell phone, utilities, etc., with no or low credit.
Once you have a house and money, all of the above goes away. You can bond your own car insurance and get an umbrella policy to cover things that go wrong. You will already own the house with utilities, and you can buy your cell phone outright and get a monthly plan. A credit score says, "I'm good at paying interest." No credit score means "I have money."
Thu Dec 04, 2014 4:16 am
Cash: $ 380.25
Joined: 09 Feb 2009
Co-signing is never a good idea, especially with a friend or family member. If you cherish your relationship with this person, don't put it in jeopardy. What your not thinking about is all of the ways this deal could go bad. You could lose your job or default on your payments and then they chase her and let's say she doesn't make the payments and now suddenly both of your credit scores take a hit. And if they repossess the car, your both liable for the difference the sale of the car doesn't bring. I personally don't buy cars that I cannot afford to pay for, because cars and trucks never made anyone money.
Risk comes from not knowing what you're doing. (Warren Buffet)