cancel
Showing results for 
Search instead for 
Did you mean: 

When helping your family goes horribly wrong.

Contributor

Re: When helping your family goes horribly wrong.

+1000000000

Put math before emotion, and you will win every time.
Message 11 of 31
Contributor

Re: When helping your family goes horribly wrong.


iced wrote:

The trick is to not let any personal emotion weigh in when making financial decisions involving family. Just because they're related to you doesn't mean they aren't just as untrustable, irresponsible, or selfish as a complete stranger.

 

In addition to what's already been covered, I would add one should never co-sign on a loan with a family member.


I wouldn't say never but 9 out of 10 times it's not a good idea. I asked my brother to help me get a car a few years ago because at the time I had zero credit and no one would touch me. He had decent credit and decided to help me out by co-signing because he knew I was a responsible person, I paid the loan back completely and never missed a payment. I was responsible not everyone is though, I'm glad he trusted me but I wouldn't recommend it for everyone.

Message 12 of 31
Contributor

Re: When helping your family goes horribly wrong.

You're right though, money is business and family is personal. Never shall the two ever mix again for me.

Message 13 of 31
Community Leader
Valued Contributor

Re: When helping your family goes horribly wrong.

We will loan money to real close friends, but we get collateral before we do. And there is a set time limit for repayment, if it's not repaid by then its ours to do whatever we want with. This is for larger amounts of money, not 10 or 20 of course.
Message 14 of 31
Established Contributor

Re: When helping your family goes horribly wrong.


DrPeaceCraft wrote:

iced wrote:

The trick is to not let any personal emotion weigh in when making financial decisions involving family. Just because they're related to you doesn't mean they aren't just as untrustable, irresponsible, or selfish as a complete stranger.

 

In addition to what's already been covered, I would add one should never co-sign on a loan with a family member.


I wouldn't say never but 9 out of 10 times it's not a good idea. I asked my brother to help me get a car a few years ago because at the time I had zero credit and no one would touch me. He had decent credit and decided to help me out by co-signing because he knew I was a responsible person, I paid the loan back completely and never missed a payment. I was responsible not everyone is though, I'm glad he trusted me but I wouldn't recommend it for everyone.


 I'm along the same thought lines as you.  Never is a strong word...  When it comes to co-signing for something like a car, I would want the car to be in MY name, so that if something happens are payments aren't made, its is MY card to  do with as I deem necessary.   "Hey cousin Bob, you haven't made your payment to me for two months, and I just can't afford two car payments.  I'm going to sell the car.  Let's work on getting you something cheap and reliable so you can still get to work."

Cap1 Venture: $18K | Amex BCE: $15K | NFCU CR: $15K | Wells Fargo: $11K | Cap1 Savor: 10K | Cap1 QS: $8.5K | Barclays Rewards: $7.75K | Discover IT: $6K | Sportsman's Guide: $5.9K | NRA: $5.5K | Legacy Visa: $2.75K | Elan Plat: $2.3K | Cap1 PS: 2K | Cabela's: $1K

 

Current Scores: EQ: 725 | TU: 741 | EX: 708



 

Message 15 of 31
Contributor

Re: When helping your family goes horribly wrong.


Dalmus wrote:

DrPeaceCraft wrote:

iced wrote:

The trick is to not let any personal emotion weigh in when making financial decisions involving family. Just because they're related to you doesn't mean they aren't just as untrustable, irresponsible, or selfish as a complete stranger.

 

In addition to what's already been covered, I would add one should never co-sign on a loan with a family member.


I wouldn't say never but 9 out of 10 times it's not a good idea. I asked my brother to help me get a car a few years ago because at the time I had zero credit and no one would touch me. He had decent credit and decided to help me out by co-signing because he knew I was a responsible person, I paid the loan back completely and never missed a payment. I was responsible not everyone is though, I'm glad he trusted me but I wouldn't recommend it for everyone.


 I'm along the same thought lines as you.  Never is a strong word...  When it comes to co-signing for something like a car, I would want the car to be in MY name, so that if something happens are payments aren't made, its is MY card to  do with as I deem necessary.   "Hey cousin Bob, you haven't made your payment to me for two months, and I just can't afford two car payments.  I'm going to sell the car.  Let's work on getting you something cheap and reliable so you can still get to work."


+100000000000000000000000

 

 

I'd never co-sign my family but this would definitely be a good route to go to limit your exposure and cover yourself in the likely event things went bad.

 

Message 16 of 31
Established Contributor

Re: When helping your family goes horribly wrong.


Dalmus wrote:

DrPeaceCraft wrote:

iced wrote:

The trick is to not let any personal emotion weigh in when making financial decisions involving family. Just because they're related to you doesn't mean they aren't just as untrustable, irresponsible, or selfish as a complete stranger.

 

In addition to what's already been covered, I would add one should never co-sign on a loan with a family member.


I wouldn't say never but 9 out of 10 times it's not a good idea. I asked my brother to help me get a car a few years ago because at the time I had zero credit and no one would touch me. He had decent credit and decided to help me out by co-signing because he knew I was a responsible person, I paid the loan back completely and never missed a payment. I was responsible not everyone is though, I'm glad he trusted me but I wouldn't recommend it for everyone.


 I'm along the same thought lines as you.  Never is a strong word...  When it comes to co-signing for something like a car, I would want the car to be in MY name, so that if something happens are payments aren't made, its is MY card to  do with as I deem necessary.   "Hey cousin Bob, you haven't made your payment to me for two months, and I just can't afford two car payments.  I'm going to sell the car.  Let's work on getting you something cheap and reliable so you can still get to work."


Co-signing on a loan for a car and putting that car in your name still exposes your credit profile to delinquincies if cousin Bob misses payments on you. Where's the logic in risking your profile over that? If you're going to put the car in your name, why not just put the loan in your name too and have Bob send you payments? Bob still gets a car and you are in control of your profile.

 

If the idea is to build Bob's credit profile, there are easier and lower-risk ways to do that than with putting a car loan on your report. He can open a secured credit card or get a loan he doesn't require a co-signer for.

 

In general, lessors ask for a co-signer for one of two reasons:

 

1. The lessee's income suggests he/she may struggle to afford the payments.

2. The lessee's credit profile suggests a somewhat significant risk of missing one or more payments.

 

In either case, you have to ask yourself - do you *trust* (not like, not love....trust) this person enough to not miss a payment for the term of the loan knowing they have one of the two issues above? It's your backside that's on the line if they miss a payment.

 

Yes, never is a strong word, but in this case I'm sticking by it until someone presents to me a case where co-signing makes rational financial sense. To re-iterate my original post, if you wouldn't co-sign for a stranger, then why would you co-sign for a family member?

Message 17 of 31
Contributor

Re: When helping your family goes horribly wrong.


iced wrote:

Dalmus wrote:

DrPeaceCraft wrote:

iced wrote:

The trick is to not let any personal emotion weigh in when making financial decisions involving family. Just because they're related to you doesn't mean they aren't just as untrustable, irresponsible, or selfish as a complete stranger.

 

In addition to what's already been covered, I would add one should never co-sign on a loan with a family member.


I wouldn't say never but 9 out of 10 times it's not a good idea. I asked my brother to help me get a car a few years ago because at the time I had zero credit and no one would touch me. He had decent credit and decided to help me out by co-signing because he knew I was a responsible person, I paid the loan back completely and never missed a payment. I was responsible not everyone is though, I'm glad he trusted me but I wouldn't recommend it for everyone.


 I'm along the same thought lines as you.  Never is a strong word...  When it comes to co-signing for something like a car, I would want the car to be in MY name, so that if something happens are payments aren't made, its is MY card to  do with as I deem necessary.   "Hey cousin Bob, you haven't made your payment to me for two months, and I just can't afford two car payments.  I'm going to sell the car.  Let's work on getting you something cheap and reliable so you can still get to work."


Co-signing on a loan for a car and putting that car in your name still exposes your credit profile to delinquincies if cousin Bob misses payments on you. Where's the logic in risking your profile over that? If you're going to put the car in your name, why not just put the loan in your name too and have Bob send you payments? Bob still gets a car and you are in control of your profile.

 

If the idea is to build Bob's credit profile, there are easier and lower-risk ways to do that than with putting a car loan on your report. He can open a secured credit card or get a loan he doesn't require a co-signer for.

 

In general, lessors ask for a co-signer for one of two reasons:

 

1. The lessee's income suggests he/she may struggle to afford the payments.

2. The lessee's credit profile suggests a somewhat significant risk of missing one or more payments.

 

In either case, you have to ask yourself - do you *trust* (not like, not love....trust) this person enough to not miss a payment for the term of the loan knowing they have one of the two issues above? It's your backside that's on the line if they miss a payment.

 

Yes, never is a strong word, but in this case I'm sticking by it until someone presents to me a case where co-signing makes rational financial sense. To re-iterate my original post, if you wouldn't co-sign for a stranger, then why would you co-sign for a family member?


In my case the reason I needed a co-signer wasn't due to either reason, it was because despite having good income I had only been at my job for 2 months. On top of that I had no established credit, so they felt I was a gamble.

My brother on the other hand had been at his job for 3 years, and made twice what I did at the time. Like I said it depends on the person but even if they are responsible things happen in life. Any way you slice it you're still taking a chance co-signing anything, even married people aren't doing this anymore.Smiley LOL

Message 18 of 31
Valued Contributor

Re: When helping your family goes horribly wrong.

I wouldn't cosign for anyone. Not even my kids. I'd rather help you buy a car cash while you build your profile.

 

I don't care how responsible a person is; I'm not putting myself on the line. 

11/2017: EX 704 | TU 720 | EQ 672 -- Starting (2/2016): 630 | 620 | 580 -- INQs: 17 | 26 | 28 (last 6 months: 5 | 2 | 6)
AMEX Delta: $10k, Marvel: $8k, Discover IT: $7.2k, AMEX BCE: $6k, Target MC: $5k, PayPal 2%: $8k, CO QS: $2.6k, Merrick: $1.6k, Barclay's NFL Rewards: $1k, CO BuyPower: $500. And a mix of well-loved store cards.
Message 19 of 31
Moderator

Re: When helping your family goes horribly wrong.

I can add one more piece of advice:  don't rent to family members either.  I purchased a home for my parents to live in and they were to pay me rent (less than market and less than the actual mortgage payment).  They paid for a grand total of 10 months and lived there more than 3 years. At the end, they did a "midnight move" to some place else. Frustrating. But that experience was one of many with them...the fact that I trusted them after several negative experiences having to do with me lending money to them, this was the last straw. It bothered me more that they did the midnight move than the non-payment. Who does that? Smiley Frustrated

Message 20 of 31