topic Re: On Being a Responsible Cosigner in Relationships and Money

On Being a Responsible Cosigner

marty56 — Thu, 09 Nov 2017 22:59:27 GMT

I don't want to debate whether cosigning a loan for familiy is good or not but if you do remember that you have a responsibility to the person you do that for to make sure they can really afford to make the payments so you don't dig them into a hole and put your own credit at risk. You have to be able to afford to make the payments yourself if the other person can't.

I saw a post in the auto forum about a guy who's grandfather cosgined a loan that he can't afford to make the payments and is underwater on the loan.

Re: On Being a Responsible Cosigner

Anonymous — Wed, 04 Oct 2017 12:38:46 GMT

Agreed! My dad co-signed a car loan for me when I was 18. He never should have...it was too much for me and I was irresponsible. When I couldn't pay it, he actually refused to help me which now 20 years later was the best thing he ever did for me. I learned the hard way. Messed his credit up for a bit, but he already had a paid off house and no debt so he wasn't worried about it. It's the event that woke me up and taught me that no one gets bailed out. I worked hard the next few years, drove really old cars I could pull a little money together for. Eventually I paid off the loan. Had my dad been in a different position financially, I could have really hurt him, but it was a lesson hard learned. I will never co-sign a loan for anyone except possibly my kids if they have proven responsible enough to handle it but maybe too new with credit be able to get it on their own.

The thing is, generally if someone who is old enough to have established credit needs a co-signer (this is a generalization, there are of course exceptions and very good reasons like identity theft and divorce) then they probably haven't been responsible with their own money and should be a big red flag that you don't want to get involved, no matter how much you want to help.

Re: On Being a Responsible Cosigner

Anonymous — Wed, 04 Oct 2017 12:47:07 GMT

I rent out a cheap but quality car on Turo for $17-$19 per day typically. If a loved one is in need of a car, I let them insure it in their name (and mine) and they can drive it as long as they want to and can pay insurance, gas and minor maintenance (oil, fluids).

That car cost me only $1500 and it's paid for itself just by keeping around for folks to use.

Since there are sites like Turo available now (and competitors), it's easy to have the car pay for its own maintenance.

I've only had to let family borrow that car twice in the 5 years I've had it and both times it was for just enough time for them to save up cash to buy their own $1500 used car. Someone who can't qualify for a loan can do just fine buying a used car and driving it into the ground in a few years.

Re: On Being a Responsible Cosigner

iced — Wed, 04 Oct 2017 17:36:22 GMT

@marty56 wrote:
I don't want to debate whether cosigning a loan for familiy is good or not but if you do remember that you have a responsibility to the person you do that for to make sure they can really afford to make the payments so you don't dig them into a hole and put your own credit at risk. You have to be able to afford to make the payments yourself if the other person can't.

I saw a post in the auto forum about a guy who's grandfather cosgined a loan that he cnn't aford to make the payments and is underwater on the loan.

If you think the person you're cosigning for can't really afford to make the payments...heck, if you even slightly suspect they can't really afford to make the payments....why cosign for them in the first place?

That's a big part of why topics like this inevitably come back to the good/bad aspects of the action, even when it's not solicited. If the action itself has consequences that can affect the subsequent actions being discussed, those initial actions simply cannot be disregarded.

Re: On Being a Responsible Cosigner

TheVig — Sun, 05 Nov 2017 10:14:36 GMT

I don't co-sign period. I also don't loan or rent my vehicles out.

Some years back a relative wanted to borrow a vehicle while theres was in the shop. I refused. Relative finds another family mermber to borrow a car from........AND then the legal nightmare began.......relative who borrowed the the car ran a red light and ended up causing someone to spend the rest of their life in a wheelchair and eating thru a straw. The relative who loaned the car ended up getting sued too.

Maybe I just go thru life a little too paranoid, but then again, I rarely find myself left holding the bag either.

Re: On Being a Responsible Cosigner

marty56 — Thu, 09 Nov 2017 23:00:39 GMT

I would cosign for a close family member anytime as long as I could afford the payment and they really needed help. I wouldn't expect anything in return. You make the payment and the other person gives you the money so your credit is protected.

My father did that for me on my first car loan and even though I dug myself into loads of CC debt and late payments , I never missed that car payment or any car payment for that matter.

I agree cosigning and loans to family and friends usally never ends well but if you consider it a gift that you can afford to make, it can. It is all up to how you view it and if you can afford to loose the money.

Re: On Being a Responsible Cosigner

Anonymous — Thu, 09 Nov 2017 04:12:33 GMT

I'm 0 for 2 on co-signing, as in I've been burned the 2 times I've done it. Both times it resulted in late payments landing on my credit report, ruining my ~800 scores and both times it resulted in me having to pay $3500-$6000 to pay off the accounts.

I will never co-sign for anyone ever again, no matter who they are.

Re: On Being a Responsible Cosigner

Kree — Thu, 09 Nov 2017 13:53:59 GMT

I have no problem co-signing. But 2 rules.

1. I need to be able to afford to make the payments myself if needed.

2. I take care of the physical payments, and the person who cosigns is responsible for paying me.

I might get paid late a few times, and depending upon who they are I might have to waive a payment or two, or give a discount, but my CS is never effected.

Write off any missing money on your taxes and get up to 35% of the money back. They will need to report it and pay taxes, but chances are anyone who needs help making their payments doesn't make enough to actually pay taxes anyway.

And personal rule, If I co-sign, it is an investment in that person. Sometimes investments go south, and I lose my money. But I don't blame the person. No beef with family. Business and love is seperate.

Re: On Being a Responsible Cosigner

Anonymous — Thu, 09 Nov 2017 20:37:31 GMT

@Kree wrote:
I have no problem co-signing. But 2 rules.
1. I need to be able to afford to make the payments myself if needed.
2. I take care of the physical payments, and the person who cosigns is responsible for paying me.

I might get paid late a few times, and depending upon who they are I might have to waive a payment or two, or give a discount, but my CS is never effected.

Write off any missing money on your taxes and get up to 35% of the money back. They will need to report it and pay taxes, but chances are anyone who needs help making their payments doesn't make enough to actually pay taxes anyway.

And personal rule, If I co-sign, it is an investment in that person. Sometimes investments go south, and I lose my money. But I don't blame the person. No beef with family. Business and love is seperate.

I only co-sign for vehicle purchases. I have a similar set of rules and mindset as you. In addition:

I must have a fairly healthy relationship with the other party (family, long-time friend, etc.)
The loan must be applied to a used vehicle that matches the situation at hand. These days, a new vehicle is a "want". I only co-sign for a "need"
I get the other set of keys

Re: On Being a Responsible Cosigner

Kree — Thu, 09 Nov 2017 21:00:20 GMT

@Anonymous wrote:
I only co-sign for vehicle purchases. I have a similar set of rules and mindset as you. In addition:
I must have a fairly healthy relationship with the other party (family, long-time friend, etc.)
The loan must be applied to a used vehicle that matches the situation at hand. These days, a new vehicle is a "want". I only co-sign for a "need"
I get the other set of keys

Good rules, I would personally disagree on the new vs used part. I've found that a new (reasonably priced) vehicle is a better option. It practically guarantees no repair costs due to the warrantty. A reliable vehicle, and a flat monthly cost is very important for those who can barely make ends meet. A broken car could equal loss of income in addition to the repair costs. But thats just like my opinion.

Re: On Being a Responsible Cosigner

GFer — Tue, 12 Dec 2017 14:46:38 GMT

This is a timely and relevant post for me.

I leased a car for daughter. She makes the payments. (Not always have they been on time, but I planned for this. Mostly they are, though.)

The lease is ending in May 2018. She assumes I am going to buy the vehicle and she will continue to make payments. Recently, she moved back in with me and she says now she can save to put between $5-7,000 down on the car. I don't see her saving this much. The miles are way over on the car because her boyfriend doesn't have a license and she carts him everywhere. I've never leased a car before, and so I just jumped in trying to help her. I set the insurance up under the umbrella of mine so it would be discounted and because the lease is in my name. However, she has her 'own' policy so that my responsibility is limited. I seriously do not want to be tied to this deal anymore. She had two minor accidents and two dui's since she has had the vehicle. This scares me to death. I also found out that she has let the boyfriend drive on several occasions. I just recently took a loan to replace my car (I bought an older car and there is no lien on it). I am selling my older car to my granddaughter. I'm afraid that I would owe a fortune if I didn't buy the car! If I knew what would be owed, I could plan for this better. I'm thinking we can get her an older car (somewhat of a beater) and I'll pay the dealer what I owe and she can pay me back. I would rather do that than be tied to a loan for several years. Anyone have any input on the lease, the mileage, and previous damage? The car was repaired both times she was in accidents and she's kept up the maintenance.

Re: On Being a Responsible Cosigner

iced — Tue, 12 Dec 2017 15:22:15 GMT

@GFer wrote:
This is a timely and relevant post for me.
I leased a car for daughter. She makes the payments. (Not always have they been on time, but I planned for this. Mostly they are, though.)
The lease is ending in May 2018. She assumes I am going to buy the vehicle and she will continue to make payments. Recently, she moved back in with me and she says now she can save to put between $5-7,000 down on the car. I don't see her saving this much. The miles are way over on the car because her boyfriend doesn't have a license and she carts him everywhere. I've never leased a car before, and so I just jumped in trying to help her. I set the insurance up under the umbrella of mine so it would be discounted and because the lease is in my name. However, she has her 'own' policy so that my responsibility is limited. I seriously do not want to be tied to this deal anymore. She had two minor accidents and two dui's since she has had the vehicle. This scares me to death. I also found out that she has let the boyfriend drive on several occasions. I just recently took a loan to replace my car (I bought an older car and there is no lien on it). I am selling my older car to my granddaughter. I'm afraid that I would owe a fortune if I didn't buy the car! If I knew what would be owed, I could plan for this better. I'm thinking we can get her an older car (somewhat of a beater) and I'll pay the dealer what I owe and she can pay me back. I would rather do that than be tied to a loan for several years. Anyone have any input on the lease, the mileage, and previous damage? The car was repaired both times she was in accidents and she's kept up the maintenance.

This will depend on the manufacturer you got the lease with, but they can be pretty meticulous, especially if you do not plan on taking out another lease/finance. Expect a lease termination fee (usually in the hundreds of dollars), a penalty per mile over the agreed upon amount (though some will let you "buy" more miles at a discount up to 6 months prior to lease-end), and charges for wear and tear. If the tread is below a certain amount, you'll be paying for new tires, and any scratches or scuffs usually incur additional fees.

With my last lease at turn-in, I had to pay for 2 tires and a small scratch on the rear quarter panel - $2,100 total. I got the termination fee waived since I bought another car at the same time and I was about 10,000 under on miles so I got a $300 credit there, so my total lease turn-in cost was $1,800.

Re: On Being a Responsible Cosigner

Kree — Thu, 14 Dec 2017 19:23:16 GMT

You can get the car inspected by the leasing company for free. They will give an estimate of cost for wear/tear stuff. You do not need to have these things fixed by the dealer. Take their list and get it done cheaper elsewhere. Previous accidents do not matter if the've been repaired. Tires do not have to be original equipment, you can buy 40 dollar walmart specials (for most leases double check the wording usually just talks about thread and don't mention brands)

Re: On Being a Responsible Cosigner

iced — Thu, 14 Dec 2017 19:48:00 GMT

@Kree wrote:
You can get the car inspected by the leasing company for free. They will give an estimate of cost for wear/tear stuff. You do not need to have these things fixed by the dealer. Take their list and get it done cheaper elsewhere. Previous accidents do not matter if the've been repaired. Tires do not have to be original equipment, you can buy 40 dollar walmart specials (for most leases double check the wording usually just talks about thread and don't mention brands)

Be sure to check your lease regarding tires - some manufacturers will state a minimum rating of tire, but others will specify exactly what must be brought back (or better), and some will specify OEM. For example, don't turn in a leased BMW without runflats. Unless the guy inspecting it phoned it in that day, they'll catch it and you'll be billed for a new runflat (though, sometimes, the dealership will charge you less for a new tire than the local tire store).

Re: On Being a Responsible Cosigner

GFer — Fri, 15 Dec 2017 00:40:41 GMT

Very helpful tips Iced & Kree!

Thank you very much! I will look into this, as the car needs to be checked for tires. They won't do that for general maint. will they?

I wouldn't think so.

Re: On Being a Responsible Cosigner

Kree — Fri, 15 Dec 2017 15:52:20 GMT

Oil changes and such? Might if the check engine light or low oil light is on.