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Snags
Posts: 3
Registered: ‎06-10-2009
0

Co-signer

Hey everyone.. Not really sure how this goes.. I currently work as a valet attendant so my take home pay does not look great.. I clear $1200 a month but make about another $600 week in tips.. Can't prove it but have bank statements showing big deposits everyweek.. My question is obviously I need a co-signer for auto loan but only co-signer I have has a worse fico than I do.. The thing is she makes wayyy more than I do showing on the books so obviously I need her for proof of income.. Will lenders use my score with her combined income or will they take the lowest score? Thanks guys
Valued Contributor
usmc58555
Posts: 1,673
Registered: ‎02-18-2009
0

Re: Co-signer


Snags wrote:
Hey everyone.. Not really sure how this goes.. I currently work as a valet attendant so my take home pay does not look great.. I clear $1200 a month but make about another $600 week in tips.. Can't prove it but have bank statements showing big deposits everyweek.. My question is obviously I need a co-signer for auto loan but only co-signer I have has a worse fico than I do.. The thing is she makes wayyy more than I do showing on the books so obviously I need her for proof of income.. Will lenders use my score with her combined income or will they take the lowest score? Thanks guys

 

1-You are openly declaring you commit State and Federal tax fraud.

 

2-I am surprised your employer does not have some mechanism in place to allow you to record your tipped income.

 

3-You may want to switch to living a bit more of a "cash" lifestyle in regards to paying bills and such as bank deposits in excess of paychecks will raise questions if ever audited. (Granted you have to weigh your probability of actually being audited....but........) 

 

Many tipped service industry employees have this problem. They do not report all their tipped income ( for example to avoid taxes or simply try to ensure something of a paycheck) and are penalized when their paycheck stubs and annual income show much less then "actual" but are not enough to qualify for loans, credit, and such.

 

[on the opposite side I have seen small time drug dealers and invisible income types work in restaurants to declare HUGE tips that are really their ill gotten gains to launder their income for financial reporting]

 

Since you have not given any real FICO numbers for you or your friend I cannot give any real advice in that regards.

 

One aspect of Advice I will give is....as a tipped/cash employee you probably spend a LOT of money like water as you have an "easy come easy go" mentality and you can just "make more" tomorrow.

It is really easy to overspend or spend frivolously when you make a hundred in cash each night.

You may wish to look at your spending and see where you are probably hemorhaging money away. From personal experience 4 beers a night after work factors out to $25 a night plus tips and can quickly add up.

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Moderator Emeritus
Lel
Posts: 5,268
Registered: ‎03-18-2008
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Re: Co-signer


Snags wrote:
Hey everyone.. Not really sure how this goes.. I currently work as a valet attendant so my take home pay does not look great.. I clear $1200 a month but make about another $600 week in tips.. Can't prove it but have bank statements showing big deposits everyweek.. My question is obviously I need a co-signer for auto loan but only co-signer I have has a worse fico than I do.. The thing is she makes wayyy more than I do showing on the books so obviously I need her for proof of income.. Will lenders use my score with her combined income or will they take the lowest score? Thanks guys

Getting back to your original question, and speaking in purely hypothetical terms, the lenders will look at the lower score and your combined verifiable incomes.

 

I didn't see anything in your message to suggest that you spend money unwisely.  On the contrary, since you say you make "big deposits every week", it sounds like you're not taking your tip money and spending it on horses or Faberge eggs.

 

It is true that tips are taxable income, and you should be reporting it to the IRS.  Failure to do so puts you at risk for being hit with a bill for back taxes and penalties if the IRS and/or your state tax board finds out.  As I recall from bartending school long ago, we were supposed to record our tips in two separate books, one kept at work and one kept at home.  For some reason, this was supposed to validate the data contained in each other.  I know, it doesn't really make sense, but that's what I was taught.  That was a very, very long time ago, and I don't work for tips any more.

Moderator Emerita
LilMirth
Posts: 3,091
Registered: ‎08-09-2008
0

Re: Co-signer

Snags,

 

Have you already tried applying for financing with a dealer? Don't assume that you'll absolutely have to have a co-siger if you have verifiable income and credit history. Usually, on applications for credit, you'll have the opportunity to document "other income" such as tips, alimony, child support, etc...

 

If you have a too thin or short credit file and you really do need a co-signer, the co-signer will need to be creditworthy enough for financing, and if it's a "bad credit"/"second chance" deal, the interest rates that they'll 'sell' you are going to be outrageous.

 

I'd strongly suggest that you look into establishing a relationship with a big credit union like NavyFed (if you're eligible to join) or Alliant, etc... Open a checking & savings account, and inquire after their loan products. You may find that you don't need that co-signer after all.

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LilMirth
Posts: 3,091
Registered: ‎08-09-2008
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Re: Co-signer

usmc58555,

 

Reading, re-reading, and reading again, I didn't see where the OP confessed to tax crimes or any other illgotten gains. Simply put, there just wasn't enough information for you to make that type of accusation. Obviously, I'm not a Mod, but as a fellow member I'm asking you to please be kind, and when in doubt, give people the benefit of the doubt that they deserve. There are a number of situations that *might* be applicable, that have nothing to do with tax evasion or money laundering that you're not privy to with regard to the OPs situation. It could be as simple as the OP hasn't worked long enough to file taxes on the tips.

 

Honestly, we don't have to be cruel, accusing, or rush to judgment to give relevant advice where we think we can help. 

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Valued Contributor
Scamp
Posts: 2,791
Registered: ‎03-18-2007
0

Re: Co-signer


LilMirth wrote:

usmc58555,

 

Reading, re-reading, and reading again, I didn't see where the OP confessed to tax crimes or any other illgotten gains. Simply put, there just wasn't enough information for you to make that type of accusation. Obviously, I'm not a Mod, but as a fellow member I'm asking you to please be kind, and when in doubt, give people the benefit of the doubt that they deserve. There are a number of situations that *might* be applicable, that have nothing to do with tax evasion or money laundering that you're not privy to with regard to the OPs situation. It could be as simple as the OP hasn't worked long enough to file taxes on the tips.

 

Honestly, we don't have to be cruel, accusing, or rush to judgment to give relevant advice where we think we can help. 


+1.  Well, said LM.

 

Looks like it's time - AGAIN - to remind everybody to be friendly, supportive and respectful when posting.

 

 

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New Contributor
Eager2Learn
Posts: 73
Registered: ‎02-01-2009
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Re: Co-signer

Not trying to be argumentative here, but when you state that you "clear $1200 a month but make about another $600 a week in tips"  IS admitting to tax fraud.  Of course the OP can always clear this up at their own leisure. Technically, if you receive more than $20 in tips in any calendar month you are required to report them as earnings through your employer by the 10th of the following month.  Failure to do this can result in a 50% penalty on your taxes.  

 

Maybe I read a different post from usmc, but all I can glean out of it is a warning that the OP is actively committing tax fraud, and then going into examples of why you have to report tips as earnings, and from an industry point of view why tip income is not valued equally (if not verifiable).  Maybe I have just developed really thick skin over the years, but I did not see that as a personal attack whatsoever.

 

For the Mods:  We have a duty to not provide any advice that is illegal.  Along with that is a moral obligation to ensure that we point out something in a post that we know is against the laws.  

 

I didn't mean to get on a soapbox, just had to give "another point of view".   

 

 

Valued Contributor
usmc58555
Posts: 1,673
Registered: ‎02-18-2009
0

Re: Co-signer


Eager2Learn wrote:

Not trying to be argumentative here, but when you state that you "clear $1200 a month but make about another $600 a week in tips"  IS admitting to tax fraud. EXACTLY Of course the OP can always clear this up at their own leisure. YES BUT THOSE DOCUMENTS WILL NOT HELP IN THE CURRENT SITUATION Technically, if you receive more than $20 in tips in any calendar month you are required to report them as earnings through your employer by the 10th of the following month.  Failure to do this can result in a 50% penalty on your taxes.  

 

Maybe I read a different post from usmc, but all I can glean out of it is a warning that the OP is actively committing tax fraud, and then going into examples of why you have to report tips as earnings, and from an industry point of view why tip income is not valued equally (if not verifiable).  Maybe I have just developed really thick skin over the years, but I did not see that as a personal attack whatsoever. THANK YOU, I APPRECIATE THE FACT THAT YOU READ WHAT I WROTE

 

For the Mods:  We have a duty to not provide any advice that is illegal.  Along with that is a moral obligation to ensure that we point out something in a post that we know is against the laws. MY THINKING AS WELL 

 

I didn't mean to get on a soapbox, just had to give "another point of view".   

 

 


 

 

Publication 531 (2008), Reporting Tip Income

 

SInce the OP is not giving any FICO for themselves or their GF or supplemental information it is pretty darn hard to give car financing advice.

The truth of the matter is, for whatever purpose you want to use it for UNREPORTED TIP INCOME IN ANY WAY SHAPE OR FORM DOES NOT COUNT IN GETTING ABOVE THE BOARD FINANCING. BRINGING IN YOUR BANK STATEMENTS SHOWING DEPOSITS DOES NOT WORK FOR A FINANCE COMPANY EITHER.

 

Funnily enough, if the OP was actually reporting all their income properly they would be showing $600 a week x4=$2400+$1200 after tax income or pretax income of about $55K a year and would probably not need a co-signer.

 

The only thing I will admit I made a mistake in speaking was I have no idea if the OP lives in a state that does not charge an income tax then he is probably not committing "state tax fraud."

At the bottom of the 1040, before you sign is this verbiage:

 

"Under penalties of perjury,"

 

Her with a bad score and high income and him with a higher (but not great score ) and not enough income does not work out to people getting financed at a reasonable rate and in most cases getting financed at all.

 

I am not judging, nor harassing the person on a personal level.

Signature line begins:
Credit is not a right, but a business transaction, one that takes into account risk, and charges accordingly based on that risk.
Your credit score is an aspect of your credit profile. Important? yes but just an aspect. Contributing/supplemental information determines the finer point of the deal. Ask any question, respect me not to get mad if the answer is not the affirmation you are looking for,
Moderator Emerita
LilMirth
Posts: 3,091
Registered: ‎08-09-2008
0

Re: Co-signer

First, I'll apologize in advace to the OP for this thread being jacked. Certainly, the OP deserves relevant answers to the questions asked based upon the actual information given, sans accusations based upon speculation and perhaps the personal experiences & projections of other members.

 

usmc58555,

 

It is nothing other than judgment, lacking in evidence no less, when you make accusations of criminal activity based upon circumstantial evidence that you've interpreted from an unqualified comment. Unless the OP decides to offer clarification, you are unaware of the circumstances with regard to his or her tax filings or lackthereof. You don't know. Just as you make assumptions about the way people live, and how they ought to live based upon your ideas of money management and your personal experiences, you've jumped to a hasty conclusion that you are unqualified to make about the OP.

 

Before jumping to conclusions based upon what you imagine is the case, why not ask for clarification first? I don't find fault with you pointing out that an *established* activity is illegal. I find fault with your baseless accusations that are grounded in bias rather than fact.

 

Eager2Learn,

 

Just as I stated previously, there are a number of circumstances (all legal and legitimate) that MIGHT qualify that statement. There is also the possibility of tax evasion. The statement didn't offer the information necesary for any of us (unless we are personally privy to the OPs financial books) to determine. What anyone of us think that the OP meant is just speculation, until/unless the OP comes back to tell us.

 

It's easy enough to believe, because it is common practice, that the statement is a dead ringer for not reporting or under reporting income from tips. The assumption, however, and any argument based upon it is a philosophical fallacy-- a flawed argument founded in illogical bias. "Because a lot of people do it" shades the view of vague statements like "I clear $1200 a month but make about another $600 week in tips.. Can't prove it but have bank statements showing big deposits everyweek..." The problem is that the OP doesn't qualify "can't prove it". Does "can't prove it" mean that it's cash under the table? Does "can't prove it" mean that the OP has an incomplete understanding of income and tax reporting & finance-- perhaps thinking that big banks and finance companies won't consider tips? Does "can't prove it mean that the OP keeps a legal and legitimate log, but his employer is behind in their reporting resulting in quarterly or annual adjusted income declaration? Does "can't prove it" mean that the OP hasn't been collecting tips long enough to have reported the income? Does it possibly mean something else that makes sense to the OP, but the language used sent us down a totally different path?

 

I agree with you that as responsible citizens we should offer advice that is in keeping with legality and ethics. I'd add, however, that we also have the responsibility of dispensing advice that is relevant to the inquiry, and free of harmful accusations that may not reflect reality. We have the responsibility of being respectful, kind, and supportive in these forums.

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Understanding Your FICO Score  |  Credit Scoring 101  |  Common Abbreviations  |  FTC: FCRA Links  |  FTC: FDCPA Links  |  Opt-Out  |  State Resources


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Established Member
bevj2
Posts: 10
Registered: ‎10-12-2008
0

Re: Co-signer

Well put, LilMirth!!!   :smileyhappy:

 

 


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