topic Re: Chances of being approved? in Auto Loans

Chances of being approved?

Anonymous — Wed, 08 Jul 2009 06:16:31 GMT

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

Re: Chances of being approved?

Anonymous — Wed, 08 Jul 2009 09:48:49 GMT

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.

Re: Chances of being approved?

Anonymous — Wed, 08 Jul 2009 12:45:38 GMT

jnfedup wrote:
Here is the situation:
What do you think, can he go it alone? Thanks in advance

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.

Re: Chances of being approved?

Anonymous — Thu, 09 Jul 2009 00:32:38 GMT

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.

Re: Chances of being approved?

Anonymous — Thu, 09 Jul 2009 05:58:55 GMT

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.

Re: Chances of being approved?

Anonymous — Thu, 09 Jul 2009 06:57:09 GMT

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.

Re: Chances of being approved?

Lyythine — Thu, 09 Jul 2009 10:18:32 GMT

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.

Re: Chances of being approved?

Anonymous — Sun, 12 Jul 2009 01:11:49 GMT

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?

Re: Chances of being approved?

clocktick — Tue, 14 Jul 2009 16:48:30 GMT

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.

Re: Chances of being approved?

marty56 — Tue, 14 Jul 2009 17:14:55 GMT

@Anonymous 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).

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.

Re: Chances of being approved?

203bravo — Thu, 16 Jul 2009 14:08:29 GMT

@Anonymous wrote:
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?

I would seriously doubt it... Not with 5 months worth of recent missed payments.. Regardless of the reason this makes him a huge credit risk and the days of subprime lenders for anyone has passed.

Message Edited by 203bravo on 07-16-2009 09:08 AM

Re: Chances of being approved?

Anonymous — Thu, 16 Jul 2009 16:28:39 GMT

@Anonymous wrote:
@Anonymous 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.

We have a rule in my house: You may not mention how much "off" the purchase is, you must communicate in terms of how much "on" it is.

For example my wife will get excited about a 30% "off" sale. I always change the conversation to the 70% "on" sale. A great deal in and of itself is not a great reason to buy. It is a great incentive to buy "that" product if all ready in the market and all ready going to purchase. But $36k is still $36k no matter how it is "structured" on paper. It is no less expensive to pay back $36k on a great deal as it is to pay back $36k on a regular deal, all things being equal.

If he has not paid his mortgage in 5 months, then he should have around $15,000 to $20,000 CASH saved from the missed payments. With that much down, he can qualify on his own GUARANTEED. If he has not saved the money, then he has more money troubles than just the mortgage and you don't want to anchor yourself to that sinking ship.

Re: Chances of being approved?

Anonymous — Thu, 16 Jul 2009 18:28:15 GMT

Great responses, guys. I agree, 36k is still 36k no matter how you spin it. He does have about 14k put away at the moment. The car itself is 43k out the door. So what I have offered my brother is the following: Apply at 3 different institutions (of my choosing) and if they all turn him down, then, and only then, will I offer to co-sign on a 20K loan. This way he will be forced to come up with another 9k if he wants to make it happen. In the end, he would have to put down 23k of his own money.

What do you guys think, yay or nay? I think it is more than fair.

Re: Chances of being approved?

Anonymous — Thu, 16 Jul 2009 19:39:57 GMT

I think he should take $15k and buy a 2-year old Honda Accord, grow up, behave like an adult, and stop expecting his brother to take care of him.

But that's just me.

He's getting a "great deal" ? He's dropping $36k on a DEPRECIATING asset. Some deal.

Re: Chances of being approved?

Anonymous — Thu, 16 Jul 2009 19:43:38 GMT

NAY

No one needs a 43K car.

No one needs one who isn't paying his mortgage for whatever reason he isn't paying it.

14K "put aside" can buy several nice used vehicles.

"using you" to prop him up in the jam he got himself into is still "using you."

Have you considered what his intentions are with the house or the car?

Can he be attempting to game the system and by involving you. now include you in the game....and possibly fraud.

I am sorry I have no idea the dynamic between the two of you but..... this just kinda reeks sorry.

Will he want the car titled/registered in your name? If so you are really risking being considered an accessory to fraud.

Re: Chances of being approved?

Anonymous — Thu, 16 Jul 2009 20:37:25 GMT

No. Do not do it.

You aren't risking your credit to feed his family.

You aren't risking your credit to keep a roof over their head.

He wants an over-priced luxury toy. His priorities are not straight.

Show him tough love. Tell him NO under any circumstances.

Re: Chances of being approved?

JoeBJay20 — Thu, 16 Jul 2009 23:00:22 GMT

@Anonymous wrote:
Great responses, guys. I agree, 36k is still 36k no matter how you spin it. He does have about 14k put away at the moment. The car itself is 43k out the door. So what I have offered my brother is the following: Apply at 3 different institutions (of my choosing) and if they all turn him down, then, and only then, will I offer to co-sign on a 20K loan. This way he will be forced to come up with another 9k if he wants to make it happen. In the end, he would have to put down 23k of his own money.

What do you guys think, yay or nay? I think it is more than fair.

I have no idea what the dynamic is between you and your brother, but judging from your posts it appears you have a very difficult time telling him no. Credit is not a right, it is a privilege, and judging from the way he treats his mortgage, it is a privilege he does not respect and there one for which he is not deserving. It's not just about how much money he puts in it, obviously the amount of money he has put into his mortgage was not a deterrent to his decision to discontinue paying. The amount of the loan has no bearing on the damange it will do to your credit if he decides not to pay. For the lack of a better phrase, you need to have a "come to Jesus" talk with your brother. As others have stated, with 14k saved up he can get a very nice used car. You don't need to be "fair", you need to be honest and assertive. If he wants this "great deal" (and I would argue that unless you're getting it for free, there is no such thing as a "great deal" on a depreciating asset), let him figure out how to do it on his own.

Re: Chances of being approved?

Anonymous — Sat, 18 Jul 2009 17:41:00 GMT

@Anonymous wrote:
Great responses, guys. I agree, 36k is still 36k no matter how you spin it. He does have about 14k put away at the moment. The car itself is 43k out the door. So what I have offered my brother is the following: Apply at 3 different institutions (of my choosing) and if they all turn him down, then, and only then, will I offer to co-sign on a 20K loan. This way he will be forced to come up with another 9k if he wants to make it happen. In the end, he would have to put down 23k of his own money.

What do you guys think, yay or nay? I think it is more than fair.

You already made your decision.

Not one of us who posted told you to do it or thought it was a good idea.

You are looking for an affirmation and I am not sure you will get it.

I am reminded of a quote from Neil Gaiman's The Sandman: I have no liking for prisons, Master Li. Sometimes I suspect that we build our traps ourselves, then we back into them, pretending amazement the while.

Re: Chances of being approved?

marty56 — Sat, 18 Jul 2009 20:34:20 GMT

If you go down the cosign road, I would get a written agreement from your brother that you can take the keys and sell the car if he is late one time. Again I would not do this but I understand why you would want to.

Re: Chances of being approved?

Anonymous — Sat, 25 Jul 2009 22:38:25 GMT

Update: No one approved his loan applications. He didn't have the extra $9,000 I asked him to come up with so he has opted to purchase a used 2008 FX35 for 31k. He put down 17k and I co-signed for the remaining 14k over a 30 month period. I know I know.... I may regret it, but hey, family is family.