Auto Loans

[jnfedup]

Here is the situation:  My brother wants me to co sign an auto loan because he does not believe he will qualify on his own.  He is in the process of a short sale (he has not paid his mortgage in 5 months).  His credit scores have gone from 730's to to TU 690 EQ 640 EXP 633 as a result.  His salary is 75k a year, he is current on everything else (3 cc accounts with a combined balances of $8,000)  He wants to borrow 36k.  What do you think, can he go it alone?  Thanks in advance

[scorerise]

Do not cosign.

If he couldn't keep up with his mortgage, why would he be buying a 36K car?

Do not get on that sinking ship.

[usmc58555]

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jnfedup wrote:
Here is the situation:  

  What do you think, can he go it alone?  Thanks in advance

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Do you think he can go it alone? And more importantly, do you think you can make his payments if he does not pay.

I would politely decline and tell him you are having income issues of your own and cannot take on the debt.

If he can't pay his mortgage, he does not need a 36K car.

He may not be paying his mortgage to "position" himself, but I would stay away till he is done doing so.

[mickie08]

Do not do it.  First off, this is not a 10K car purchase to get him on his feet.  This is a 36K loan.  If he has not paid his mortgage in 5 months (and has not immediate plans to), he should have plenty of cash sitting around right now for other things (like a hige down payment).  Second, he should not even be thinking of buying that much of a car in this position.  Have we learned nothing in the last 2 years?  There is not a single person who NEEDS a 36K car unless you are speaking of people with some security concerns.  You should neither risk your credit/finances nor enable him to do so.

If for some reason you feel you have to, you should make him explain exactly why this is necessary and how he plans to maintain it.  On top of that, I would demand full access to the account and I would check it monthly a day or two before any grace periods end on the payment.  Also, demand a key for the car in case you need to take it back to cover your own butt. 

[jnfedup]

Thanks for all of the feedback.  Yeah, I know it wouldn't be a wise move on my part, but...he has always been very responsible with his finances (until he purchased a $400,000 home now valued @ $220,000). As far as the car loan for 36k is concerned, I agree, he doesn't really need it, he just wants to take advantage of the great deals out there at the moment (it's an Infiniti fx35).  He feels these "great deals" won't last much longer and I believe he thinks getting a good deal on this car will somehow make up for some of the money he has thrown away on the house. Anyway, thanks again for your input.

[mickie08]

The thing is that he wants to walk out on his mortgage debt becasue it is underwater, but then wants to turn around to take advantage of the market issues and buy some expensive car.  While I applaud him doing a short sale over a foreclosure, getting you finances mixed into his is just a plain bad idea. 

The second thing is that a 36K loan toes down ALOT of your available credit if you go to look for a car, purchase a house, etc.  That is a 5-600 per month payment or more.  Last, new credit, especially if it appears that you are stretching your credit capacity could be plenty reason for other credit companies to do AA and lower limits, etc on CC and cause other issues.  They just see the credit inquiries and new credit opened, they will not care that it is a co-signed loan and you are not paying.

Bottom line, if someone with financial standing can not get approved for a vehicle, they should not buy it.  It is a littel different helping out your kid for their first car or even if your brother was in dire straits and you helped them get started with a inexpensive car.  But helping him to get a luxury vehicle while he is in the middle of a short sale is just innapropriate for the sitatuation for him to ask.

Also, I am not sure if they check the sellers credit at the bank who is trying to shortsale a house.  I honestly do not know, but it would make sense that prior to approving a shortsale that they would want to verify the sellers financial situation.  The bank may not be that forgiving if they see him taking out additional credit.  That said, I have no exact knowledge of this, but It would not surprise me and I would be leary of messing it.

Last, but not least,  Having your name on the loan may make the payment cheaper, but if they are going to deny him due to the 5 months of missed mortgages, there is a strong chance that will still be the case unless you go on the loan by yourself.   

Sorry to harp on, but it just seems like a selfish and ludicrous request by your brother because it is next to impossible to deny these type requests and their not be issues down the road.  Good luck with it all.

[Lyythine]

DO NOT CO-SIGN!!!!!

Friendly advice from someone who made that mistake with a family member and ended up with a car I didnt want and a payment I didnt want even more. Dont make this mistake, he obviously does not know how to handle his finances and is going to end up taking you down with him whether or not he does so intentionally. 

[jnfedup]

I agree, it would not be a very wise decision to co-sign.  I would only do this as a last resort, to be honest (family is family).  My question is:  Is there any way my brother can qualify on his own based on his financial situation.  He has only tried one bank and they turned him down.  I told him to apply at a few more institutions before coming to me again.  So, do you guys think he has any chance of being approved?

[clocktick]

I think so.  I was approved with lower scores than that and make less than he does.  Then again, I made a hefty down payment.  Also, please don't forget that cosigning for a car loan is your equal responsibility for next 3, 4, 5+ years.  If it doesn't get paid or a payment is late or missed, it's just as much your responsibility as it is his and will reflect on your credit report.  Does he have enough saved for a large down payment?  If not, I think his priorities are mixed up at the moment.  People feel guilty saying no to family members and friends at times but in the long run a lot of times that "no" was the best thing for all parties involved.

[marty56]

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jnfedup wrote:
I agree, he doesn't really need it, he just wants to take advantage of the great deals out there at the moment (it's an Infiniti fx35).

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What happens when he realizes that the Infiniti isn't worth 36k the moment he drives it off the lot and decides not to pay on it either.