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Established Member
ballinonabudget
Posts: 27
Registered: ‎01-01-2013
0

Co-Sign vs Co-Borrow

I'm in a position to buy another car for our family in a few weeks. I'm in the middle of refinancing my house now which should close on the 14th after which I'm looking to buy the car. I have a few questions about debt to income when it comes to coborrowers vs cosigners.

 

Here are the facts:

My income:$77k myFICO pulled today 717

My wifes income:$43k don't have a fico but most likely in the 550-600 area.

 

I have 1 auto loan, 1 personal loan, and one mortgage all in my name only totaling roughly $2100 a month. This puts me at roughly 33% Debt to income. This will drop to 1900 a month give or take after the refi on the house.

My wife has 2 school loans totaling $400 a month, as well as a car payment of $300 which we would be trading in on the new car.

 

We are looking at a new ford escape 4wd for about 31k, expecting payments to be around 600 a month and as an alternative possibly leasing if the numbers were very good. She should have the income to support the car by herself but won't have high enough credit. Adding the 600 to my debt would increase my DTI to ~39% which I think would be too high to finance on my own. I think with our combine finances It would put our DTI at 34 percent before the refi which is still somewhat high.

 

If I apply as a coborrower with my wife how will the bank(Navy FCU) look at this when we request financing?

Will my wifes score hurt our APR a lot as a coborrower?

How will it look on my credit after If I were to seek financing in the future? I'm assuming on my credit I would be completely liable for the car loan when looked at invidually.

 

Should I have taken the mortgage out in both of our names, if so what would the benefits of that be on our debt to income on future financing?

 

Thanks in advance.

Old Fako score 550 in 2008ish
Current Fico(1/1/2013) EQ 717
Goal:750 100k
Open Loan Balances: 34k Auto 13.3k Auto, 5.3k Personal loan both through Navy FCU, 182k Mortgage 3.375%
The Wallet: NFCU 14k Signature Visa, USAA 10k MasterCard, Penfed 10k Cap1 500
Valued Contributor
maiden_girl
Posts: 2,095
Registered: ‎12-29-2011
0

Re: Co-Sign vs Co-Borrow

It probably would have helped your wife's credit profile if you both had taken the mortgage out in both your names so that she could benefit from having a positive tradeline reporting as well--also so that the bulk of the loan is not solely based on your income alone. If your wife's FICO scores are in the mid 500s...I don't see her getting approved for a 30k car with 600 a month payments. They are going to be much higher than that unless she has a positive reporting auto loan from previous years and the dealer uses auto enhanced scores.

 

Let me ask you:

Do you need a new car?

Do you have any baddies reporting?

AAoA?

 

Does it necessarily have to be a Ford Escape? Would you consider looking at a KIA Sportage or a Jeep Patriot? Both are mid size SUVs for around 16-20k to get those payments lower. Would a new car be for a long period of time or short term? if short term, consider lease options.

The truth is out there...
FICO scores: 758 (EQ) 741 (EX) 768 (TU) 8/14 | Goal score: 750+ (all 3)
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Valued Contributor
tooleman694
Posts: 2,297
Registered: ‎08-25-2011
0

Re: Co-Sign vs Co-Borrow

Typically with auto loans, this is how it works.

 

They will allow you to finance up to 75 percent of your income for the price of the auto. So if you earn 77k you max out at 57750k in total auto loan amounts. They also don't like to see your DTI go over 50 percent.

 

Then the banks really do not like to give you 2 auto loans unless you have credit history to prove you can handle 2 auto loans. If you have the history this will be an easy buy.

 

When I needed a second car, they wouldn't let me do it. Bank wanted my Wife to co-sign and her scores were in the 500s. Luckily the dealership had a good relationship with the bank and gave us the interest just based on my scores. This is not the norm though.

Senior Contributor
Walt_K
Posts: 3,065
Registered: ‎11-02-2009
0

Re: Co-Sign vs Co-Borrow


maiden_girl wrote:

It probably would have helped your wife's credit profile if you both had taken the mortgage out in both your names so that she could benefit from having a positive tradeline reporting as well--also so that the bulk of the loan is not solely based on your income alone. If your wife's FICO scores are in the mid 500s...I don't see her getting approved for a 30k car with 600 a month payments. They are going to be much higher than that unless she has a positive reporting auto loan from previous years and the dealer uses auto enhanced scores.

 

Let me ask you:

Do you need a new car?

Do you have any baddies reporting?

AAoA?

 

Does it necessarily have to be a Ford Escape? Would you consider looking at a KIA Sportage or a Jeep Patriot? Both are mid size SUVs for around 16-20k to get those payments lower. Would a new car be for a long period of time or short term? if short term, consider lease options.


If the wife's credit score is 550-600, that probably wasn't an option.  Some FHA loans will go as low as 580 but it's difficult to find that.

I don't know what NFCU does, auto loans aren't necessarily like mortgage loans where they use the lowest score.  There are lenders that will take the highest score of the two applicants, so adding the wife to the auto loan will not necessarily be a problem.  Ask around to see what score different lenders use when there are co-applciants.  I know there are some threads on this as well, but I don't think there's a comprehensive list.  I just know that there are plenty of reports of auto lenders using the higher score, so it shouldn't bee too difficult to find someone that will do that.


Starting Score: ~500 (12/01/2008)
Current Score: EQ 681 (04/05/13); TU 98 728 (01/06/12), TU 08? 760 (provided by Barclay 1/2/14), TU 04 728 (lender pull 01/12/12); EX 742 (lender pull 01/12/12)
Goal Score: 720


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Valued Contributor
maiden_girl
Posts: 2,095
Registered: ‎12-29-2011
0

Re: Co-Sign vs Co-Borrow


Walt_K wrote:

maiden_girl wrote:

It probably would have helped your wife's credit profile if you both had taken the mortgage out in both your names so that she could benefit from having a positive tradeline reporting as well--also so that the bulk of the loan is not solely based on your income alone. If your wife's FICO scores are in the mid 500s...I don't see her getting approved for a 30k car with 600 a month payments. They are going to be much higher than that unless she has a positive reporting auto loan from previous years and the dealer uses auto enhanced scores.

 

Let me ask you:

Do you need a new car?

Do you have any baddies reporting?

AAoA?

 

Does it necessarily have to be a Ford Escape? Would you consider looking at a KIA Sportage or a Jeep Patriot? Both are mid size SUVs for around 16-20k to get those payments lower. Would a new car be for a long period of time or short term? if short term, consider lease options.


If the wife's credit score is 550-600, that probably wasn't an option.  Some FHA loans will go as low as 580 but it's difficult to find that.

I don't know what NFCU does, auto loans aren't necessarily like mortgage loans where they use the lowest score.  There are lenders that will take the highest score of the two applicants, so adding the wife to the auto loan will not necessarily be a problem.  Ask around to see what score different lenders use when there are co-applciants.  I know there are some threads on this as well, but I don't think there's a comprehensive list.  I just know that there are plenty of reports of auto lenders using the higher score, so it shouldn't bee too difficult to find someone that will do that.


I think some FHA loans need you to have at least a 580 to work with you. The OP might have a conventional loan...not really sure tho...

The truth is out there...
FICO scores: 758 (EQ) 741 (EX) 768 (TU) 8/14 | Goal score: 750+ (all 3)
Tradelines: Capital One QS NPSL (5.0k) | Discover IT (6.0k) | Walmart Discover (5.0k) | Chase Freedom NPSL (7.3k) | Citi Simplicity (9.3k)






Established Contributor
sccredit
Posts: 815
Registered: ‎09-14-2012
0

Re: Co-Sign vs Co-Borrow

[ Edited ]

I think you should be fine with both auto loans in your name.  I had 3 loans in my name with lower income and scores than yours. 

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Established Member
ballinonabudget
Posts: 27
Registered: ‎01-01-2013
0

Re: Co-Sign vs Co-Borrow

We weren't married during the original finance so she wasn't on it then I figured it would just be easier too keep her off and to make the paperwork a lot easier. I did a va loan I'm not sure how easy it would be to add her.

 

We dont "need" a new car but she is pregnant and we have a Nissan sentra which is a little small for us. I'm only interested in the escape it's Awd tows 3500 and has a lot of extra we want, I'm not concerned about the 600 payment and I'm confident we won't have trouble getting financing but just want to go about it the best way for the best rate. I guess I should check on my own first and then add her as needed after. Has anyone taken a second auto loan with nfcu and pushed a 40 percent DTI?

 

i have 2 accounts that list as previously delinquent but shows no negative history for over 4 years. AAoA says 5 years. 

 

Thanks for the replies.

Old Fako score 550 in 2008ish
Current Fico(1/1/2013) EQ 717
Goal:750 100k
Open Loan Balances: 34k Auto 13.3k Auto, 5.3k Personal loan both through Navy FCU, 182k Mortgage 3.375%
The Wallet: NFCU 14k Signature Visa, USAA 10k MasterCard, Penfed 10k Cap1 500
Moderator Emeritus
webhopper
Posts: 7,230
Registered: ‎09-16-2011
0

Re: Co-Sign vs Co-Borrow

[ Edited ]

ballinonabudget wrote:

I'm in a position to buy another car for our family in a few weeks. I'm in the middle of refinancing my house now which should close on the 14th after which I'm looking to buy the car. I have a few questions about debt to income when it comes to coborrowers vs cosigners.

 

Here are the facts:

My income:$77k myFICO pulled today 717

My wifes income:$43k don't have a fico but most likely in the 550-600 area.

 

I have 1 auto loan, 1 personal loan, and one mortgage all in my name only totaling roughly $2100 a month. This puts me at roughly 33% Debt to income. This will drop to 1900 a month give or take after the refi on the house.

My wife has 2 school loans totaling $400 a month, as well as a car payment of $300 which we would be trading in on the new car.

 

We are looking at a new ford escape 4wd for about 31k, expecting payments to be around 600 a month and as an alternative possibly leasing if the numbers were very good. She should have the income to support the car by herself but won't have high enough credit. Adding the 600 to my debt would increase my DTI to ~39% which I think would be too high to finance on my own. I think with our combine finances It would put our DTI at 34 percent before the refi which is still somewhat high.

 

If I apply as a coborrower with my wife how will the bank(Navy FCU) look at this when we request financing?

Will my wifes score hurt our APR a lot as a coborrower?

How will it look on my credit after If I were to seek financing in the future? I'm assuming on my credit I would be completely liable for the car loan when looked at invidually.

 

Should I have taken the mortgage out in both of our names, if so what would the benefits of that be on our debt to income on future financing?

 

Thanks in advance.


Specifically with Navy, they will use the primary applicants score to base the rate... since your score is good, I think you'll get 1.79% like I did. 

If you were to seek financing in the future, it would show up as a joint account and if you were questioned about it, you could state and then show that wifey makes the payments.... in some cases they can then subtract it from your DTI

 

Your wfe's score will not hurt your APR at all with Navy, as long as YOU are the primary and she is the co-borrower.

 

I just did this with NFCU, basically added my hubby on the loan for income...  all the debt is in my name:

 

My Income:  126k this year

Monthly Installment Payments:  589 car loan, 1443 primary residence, 1163 rental property, 189 student loan, + CC minimums when I let a balance report

 

Hubby's income: 64k this year

Payments: CC minimum payment on 1 credit card...  No other debt.

 

The new car note was 784.  45k loan at 1.79%   we put 3600 down, and we are doing Overseas delivery in sweden through Volvo...  The check they send you is super easy to use and you have 60 days to use it.  They pulled mine and my husbands EQ

 

That puts my DTI at 39% (which feels very high to me :smileysad:)

And his DTI is 14%

 

Reserves of about 60k

 

 


Starting Score: 08/29/2011 TU 671 EQ 674
Current Score: TU 754 EQ 694 EX 697
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Established Member
ballinonabudget
Posts: 27
Registered: ‎01-01-2013
0

Re: Co-Sign vs Co-Borrow

Thanks Webhopper. Its good to have some specific information from NFCU. I know some lenders use the main borrower, and some use the worst of the 2, hopefully my loan works out like yours, that would be best case scenario.

 

If all works out I can get my payments under 500 a month.

Old Fako score 550 in 2008ish
Current Fico(1/1/2013) EQ 717
Goal:750 100k
Open Loan Balances: 34k Auto 13.3k Auto, 5.3k Personal loan both through Navy FCU, 182k Mortgage 3.375%
The Wallet: NFCU 14k Signature Visa, USAA 10k MasterCard, Penfed 10k Cap1 500

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