topic Re: Co-Sign question in Auto Loans

Co-Sign question

illcrew3 — Tue, 18 Aug 2009 23:50:57 GMT

My girlfriend is about to buy a car but she needs me to co-sign due to a lack of credit. How will this reflect on my CR? Will it be reported the whole life of the loan? I have heard of people getting there names removed from co-signed loans. How would I go about this in the future if I did co-sign?

Re: Co-Sign question

Lel — Wed, 19 Aug 2009 05:05:30 GMT

illcrew3 wrote:
My girlfriend is about to buy a car but she needs me to co-sign due to a lack of credit. How will this reflect on my CR? Will it be reported the whole life of the loan? I have heard of people getting there names removed from co-signed loans. How would I go about this in the future if I did co-sign?

If you co-sign the loan, it will appear on your credit report. In the eyes of the lender, you will have shared responsibility for the payment of the loan, even if your GF is going to make all the payments on her own.

If she makes consistent, on-time payments over the life of the loan, it will be a positive factor on your credit report and credit score.

If she is frequently late or defaults on the loan, this will also be reflected on your credit report and your score will suffer. Even after the loan is paid off or the car is repossessed, the negative factors will persist on your credit report for several years.

Generally, you cannot be removed from a loan unless it is refinanced in your GF's name alone.

Re: Co-Sign question

Anonymous — Wed, 19 Aug 2009 13:37:43 GMT

NEVER Co-Sign for anyone....not even your mother or father.....let alone a girlfriend.

Yes, you might be utterly in love with plans to marry, but I have read too many posts on the auto forums by ex's stating that when the relationship went sour so did the payments.

Politely tell her you love her, but you can't do it. If she doesn't understand and gets angry then that is really a red flag. If she truly loves you she will understand your position. (I am a girl and I would never put someone in this position)

I know you weren't asking for advice...but I feel so strongly about this I had to put in my 2 cents.

Good Luck.

Re: Co-Sign question

llecs — Wed, 19 Aug 2009 14:30:20 GMT

1111mel wrote:
NEVER Co-Sign for anyone....not even your mother or father.....let alone a girlfriend.

Yes, you might be utterly in love with plans to marry, but I have read too many posts on the auto forums by ex's stating that when the relationship went sour so did the payments.

I've seen post after post after post after post like that. If you guys split (and yes, I know, that would never happen...others have said that too), then you will have to make the car payments or face lates, a charge-off, collections, and a possible judgment, all of which would/could report. IMO, invest the time to improve her credit and within a month or two of work, she can have scores high enough to go about it on her own.

As Lel mentioned, the history, good or bad, would be the same on both reports.

Re: Co-Sign question

Anonymous — Wed, 19 Aug 2009 17:24:01 GMT

@illcrew3 wrote:
My girlfriend is about to buy a car but she needs me to co-sign due to a lack of credit. How will this reflect on my CR? Will it be reported the whole life of the loan? I have heard of people getting there names removed from co-signed loans. How would I go about this in the future if I did co-sign?

1- Your name will be on the loan for the l;ife of the loan. That included Credit Bureau entries on the payment history.

2- You can only get your name removed if the loan is refinanced- without your name- which meand that if their credit cannot be improved she will not be able to get a refi.

Beyond the basic- yes you are responsible for their payment history but there is something more important:

many people who co sign do not have their name affiliated with the deal in any other way and this creates a shocking set of circimstances.

You may co sign, but allowed the vehicle to be titled and registered in the GFs name. She quits paying and you are on the hook for the vehicle. You make the last 36 payments on the car, but have no legal claim to the vehicle and its possesion/ownership. you cannot take the car from them, you cannot restrict their access to the car at all. They can sell it after you pay it off.

many people co sign and say I want a set of keys, but since their name was not on the registration they are not legally able to drive it.

If you co sign: You may wish to have the deal structured where your name is on the title, loan, and registration and since you are co signeing just for her have her name only appear on the credit report.

BUT: do not co sign for any vehicle that you cannot make the payments on yourself if something happens to the other person. You dont want to be caught short when you have to start making a $300 a month payment.

Realistically a car loan is 60 months. Do you really see yourself with you girlfriend 5 years from now?

Re: Co-Sign question

marty56 — Wed, 19 Aug 2009 18:19:04 GMT

@Anonymous wrote:
Do you really see yourself with you girlfriend 5 years from now?

I would not cosign since it most likely will destory your relationship and possibly your credit for up to 7 years.

Having said that, it might be a cheap way to see if she has DW potential since her paying late on the loan would be a deal breaker for me. She has to be doubly responsible to make the payments on time since her actions or lack of now affects your credit.

I guess if you do this, you will see how important you really are to her. Jst be prepaird for the answer.

Re: Co-Sign question

Anonymous — Tue, 25 Aug 2009 15:08:59 GMT

I have never responded on one of these blogs but I had to reach out to you and anyone else reading this.

Please do not co-sign for anyone! My mother (a senior citizen) co-signed for my brother's wife for a BMW and it has been a nightmare. My mother use to have a 800 FICO; now it is 620 and after the car is recovered she might be in the 500's. This woman has left her relationship with 2 kids (4 & 5 year old) and refuses to turn the car in. This woman hasn't made a payment in 9 months, several late payments within the last 3 years and she called BMW and changed my mother's address so she wasn't informed about the delinquences. My mother is stuck paying the payments even with her not having possesion of the car. With my mother being on the account along with her daughter-in-law she can't report the car stolen. BMW is now trying to help recover the car but it will be at my mother's cost.

I know you may think you know and love this person, and you think this cannot happen to you. Don't risk your credit like that.

Re: Co-Sign question

Anonymous — Tue, 25 Aug 2009 15:48:54 GMT

Let her parents or another family member co-sign for her. If they are refusing--then that should be a red flag to you.

I went car hunting with my boyfriend of 10 years and he did not have any credit. Carmax wanted him to have a co-signer and of course he started looking my way. I tactfully told him I that I don't co-sign for anybody. Somehow Carmax found a bank to handle his loan without a co-signer and he got the car anyway. He has thrown that up in my face a couple of times since but I don't care, it's not worth the headache you will most likely have later on. Most people just do not keep their word these days--neither do they have a conscience.

Actually a co-worker of mine is still battling with an apartment management company because he co-signed for an apartment for his girlfriend a couple of years back. She left the apartment after owing a couple of months rent. She didn't tell management she was leaving nor did she tell her then ex-boyfriend what she had done. Of course management went after him when they couldn't find her. DON'T DO IT!!!!!

Re: Co-Sign question

Watchmann — Tue, 25 Aug 2009 16:00:03 GMT

DO NOT DO IT!!!!! YOU WILL BE SORRY!!!!

Re: Co-Sign question

Anonymous — Tue, 25 Aug 2009 16:31:12 GMT

Just lie to her and tell her that you can not help her because you also have bad credit.

Re: Co-Sign question

Anonymous — Tue, 25 Aug 2009 17:06:47 GMT

NEVER NEVER CO-SIGN FOR ANYONE. Most marriages don't last much less a relationship. DON'T DO IT AS YOU WILL REGRET IT.. There is a reason why your girlfriend got bad credit.

Re: Co-Sign question

Anonymous — Tue, 25 Aug 2009 17:40:21 GMT

Dont Do IT!!!! I have an extremely close friend who did that for her bf. Four months later they broke up, and 3 months after that she found out that he had never made a single payment and the car had been repossed. It ruined her credit. He skipped town and the creditor hounded her for the backed cash after the wholesale of the car. Her credit sucks, she had to hire an attorney to help work through the issues since she was never notified of the debt, and is about about 5k so far. No matter how much you love her, if you are not married to each other, dont do it! It isnt worth it!

Re: Co-Sign question

Anonymous — Tue, 25 Aug 2009 19:29:01 GMT

Never Cosign for anyone!!!!!! If they can not get it own their own establish credit and try again later!!!!

Re: Co-Sign question

Anonymous — Fri, 28 Aug 2009 15:13:36 GMT

one of two things... (to clarify firsthanf though, co-signing is usually a bad idea)

Do not lie to her about a reason you can not co-sign if you are not comfortable doing so. Explain simply that co-signing would tie up your own DTI (debt to income ratio) making it too hard if you needed to buy a car in that same time period or if you wanted to buy a house/refi a current one.

If you are willing to co-sign do the following:

Make sure you are on the loan, the title, and the registration.

Require that you have a key from day 1

Require that you have online access to the account so you can keep track from day 1

Keep 2 months of the payment held in savings so in case you have to step in, you are somewhat prepared

Spend a few bucks and have a lawyer draw up a release for her to sign waiving rights to the car if she fails to make x amount of payments so you can just go pick it up and sell it/etc. Effectively you want a power of attorney for the car in case she starts to default.

Make sure that you and your GF are both very clear on all of this. If the GF really needs the car and this is the only way, she should not be offended that you want it spelled out very clearly and that you want some measure of control.

Re: Cosign question

Anonymous — Mon, 31 Aug 2009 12:43:45 GMT

NEVER , NEVER, NEVER CO-SIGN for another person.

I once asked my father to co-sign a student loan for me at our CU (many years ago), and I wound up having SEVERE health problems that I could not predict. I gave my father my word that I would not let him down. There was nothing I could do, because my health problem took me one and one-half years before I could go to work or return to school. I let my father down and from the point that the CU went after him, our relationship went down the tubes never to recover. I did recover financially and tried to repay him whatever it cost him financially, but I could never make up to him what the situation did to him and the position it put him in, and he never forgave me. I would rather do anything than ask for a co-signer. There just are no guarantees in life, anything can happen and the future cannot be predicted. The road of "Good Intentions" is paved with tears.

If you meet a person who is hungry, you can give him a fish and he will be fed for a day. Why not take time and teach him to fish.... then he will be fed for life.

There are other options for your girlfriend. In years past, I have saved for two years in order to purchase a car with cash. In the meantime, I used other modes of transportation.... including paying for rides, public transportation, catching rides with friends, walking, renting a car.....even someone loaned me a car for few months because it was old and I pai the expenses on it and kept it in good repair. You would do better to help her find a way to do it.... get the needed transportation on her own..... than to co-sign. Yes, a co-sign can help someone get what they need quickly and give them a good credit history relatively fast. But some things just have to be learned and take time. If you must help her get a car, cover yourself legally/financially (as others here have specified), or buy her an old car and let her pay you back thereby teaching her how to make payments. Help her learn how to establish good credit the old fashioned way.... by earning it slowly over time. Also, you could consider putting her on one of your established accounts with a good credit history record with the stipulation she doesn't have access to charge anything to the account. That can help someone establish a good credit history. Even if she has to get her first car loan with a higher than normal interest rate (with a reputable lender only), once she has paid the loan on time for a year or so, she can then go to her friendly Credit Union that she a good history of banking with and apply for a refinance.

PLEASE DO NOT CO-SIGN. There are better ways to achieve what she needs, better for you and better for her.

Sincerely,

abi

Re: Cosign question

Anonymous — Tue, 01 Sep 2009 14:32:36 GMT

IMO no, not unless you are willing to pay her car payment for her and be responsible for it being paid on time. Everyone is saying to NEVER cosign for ANYONE. I don't agree 100%. I think it is ok for a spouse to cosign. I think in your case a "girlfriend" seems to most to be a real risk to cosign for. I wouldn't cosign for anyone else but my spouse. Not even my children unless I am willing to make the payments and be in charge of sending the payments.

Re: Co-Sign question

Anonymous — Tue, 01 Sep 2009 17:19:05 GMT

OMG! DONT DO IT! *WARNING* Have you not seen the freecreditreport commercials?

Re: Co-Sign question

Anonymous — Fri, 11 Sep 2009 16:12:47 GMT

What do you guys feel about this situation (which I am currently facing).

My girlfriend of the past 3 years (I am asking her to Marry me on her Birthday next month, WISH ME LUCK hahah). Her credit is very much is need of help (we are working on it, but it is a long way from anything right now). It was caused by her divorce, where her Ex was the one with bad credit and she co-signed, made purchases, etc.....

She is in need of a new car. Her current is having some major problems, and considering she is the main source of transportation for my 4 year old, and our dogs, etc.... I feel like I need to do whatever I can to get her into something that I feel safe with her driving.

So my idea, is to get the loan in my name and my name alone. She will make the payments (the budget we are looking at, is if there was something to happen, I could make the payments till I sell the car). I will essentially be leasing her the car.

Would this be the best way to handle the situation? (of course the BEST way would be that she gets the loan on her own).

Re: Co-Sign question

Anonymous — Fri, 11 Sep 2009 19:14:25 GMT

IMO, if you are responsible for the loan on the vehicle, you must also be owner of the vehicle in the example you gave. Therefore, the scenario would involve you purchasing the car with both the vehicle and loan in your name alone, and then your selling the vehicle to her and holding a private loan and she would make regular payments to you. BTW, this will not help her build good credit so she will have to be doing that separately from her car loan with you.

Should you decide to do something like that, you need to know with certainty you can make those payments even when she can't no matter how long a period of time it is for and no matter how many times it happens. You must treat the vehicle as if it is your own until she has paid for it entirely, making sure the insurance is kept up-to-date and the maintenance on the car is done, just in case you have to "repo" the car and sell it. In a situation like this, you need to make sure the vehicle is going to be worth the loan value also, so you can sell the car and make enough on the sell to pay off the loan. Keep in mind you are completely liable for whatever happens with the vehicle, just as you are with your own car, even though she is driving. Keep your own set of keys on the vehicle and you may want to gps it for tracking purposes (there are some reasonable deals for this out there).

There is other valuable information in the previous posts on this topic that you will also want to check, so PLEASE go back and read them all since the thread started. If it were me I probably would not do it because of personal past experiences from both sides of the issue. I would consider purchasing an old but mechanically sound/safe vehicle with cash and allowing her to use it while she is paying the insurance payments/maintenance, or selling it to her and holding a short term loan (with the stipulations above). Usually when a person cannot get a loan in their name for a car, it is because there are VERY good reasons and the banks/credit unions know what they are doing. It is difficult because you care for the individual, so make sure you are covered from every possible liability if you proceed to help her with this because neither of you can predict the future and so many things can go wrong.

Sincerely,

abi

Re: Co-Sign question

Anonymous — Fri, 11 Sep 2009 19:58:07 GMT

Would this be the best way to handle the situation? (of course the BEST way would be that she gets the loan on her own).

If your goal is to help her credit, then your scenario wont work, She would need to be on the loan for it to help her,,,

If you're willing to keep up with and take over the payments should the need arise, and you are comfortable with it,then do it,

Good luck with whichever way your proposal goes,