Cosigning - Question about Approval Odds

[Anonymous]

First things first: I am well aware of the risks associated with cosigning on loans. Some background: Five years ago, my parents has credit scores around 830. My father lost his job, has been unable to find adequate work since, maxed out all credit lines, and defaulted on most of them. Both of my parents are close to retirement age, and both still work in low paying retail jobs. Last week, my mother was in a car accident and their only car was totaled. It is an old car, and the insurance check after all deductibles will barely cover a downpayment. As my parents credit scores are in the low 500's with a lot of bad marks, getting approval for credit will be difficult, if not impossible.

I am considering assisting them as a cosigner on a loan. As I said, I am aware of the risks and have enough financial stability to make the payments myself, if necessary. I doubt that will happen, but I am perfectly willing and able to do so.

TL;DR: My parents scores are in the low 500's, my scores are in the midish 700's (see signature). I currently have an auto loan of my own, and about 2y average age of credit. How much, exactly, would cosigning on a loan for them increase their approval odds? Is it even worth it to try, or would their history be bad enough to completely cancel out my (decent) history? How about for rates?

[Anonymous]

I'm sure someone else can answer more than me, but I'll as my 2 cents. 

If you want to cosign for them, do it. Like you said you can afford the payments if necessary.

I'd call and ask a credit union like(beating a dead horse here) DCU more about their cosigning procedure. What I'd worry more about here is your DTI and if your income supports it, nor exactly sure how it works with cosigning but I'm sure your income has some input in it as well.

Dcu has excellent rates and uses only eq5. Penfed is amazing too but I hear they're harder to get into.

I've read something about cosigning saying if the score is bad enough they won't even be on the lien/wouldn't be primary. Which I imagine means it's just basically you getting another car payment....which...again who cares if you can afford it. Their your parents and need assistance. I'm sure you could stick them in a solid used focus/civic for about $200 or less a month 

[Appleman]

I hope your mom is OK after an accident that was severe enough to total a car.

A tough spot to be in for sure. Personally I would help out my parents if they were in need but not everyone would agree.

I would imagine your parents are just looking for something that will safely get them from point A to Point B and with agree with Kuma in finding a reasonable payment (affordable means they are more likely to make the payment).

Another option would be with you taking out  a personal loan and lending them the money to buy. You can likely get an auto loan at a much better interest rate but you are taking on the liability for the loan and vehicle. Good luck and I am glad you are in a position to help your parents.

[Anonymous]

Don't cosign for loan. Do loan for vehicle in your name only and let ur parents drive vehicle. Have them pay car note and insurance if you want. Better then to cosign since most places will give higher interest rate saying one person credit is bad. With just your credit you can easily get 0-2.9% for 60 months depending on what car your parents planning to get

[6speed8]

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@Anonymous wrote:

Don't cosign for loan. Do loan for vehicle in your name only and let ur parents drive vehicle. Have them pay car note and insurance if you want. Better then to cosign since most places will give higher interest rate saying one person credit is bad. With just your credit you can easily get 0-2.9% for 60 months depending on what car your parents planning to get

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Not a bad idea but it opens another door. Liability. Heaven forbid mom or dad have an accident that's their fault and hurt someone. I'm not saying it because of their age. I'm saying it matter of factly because I know people this has happened to. If the car is in your name, YOU are held to liability of it. You can be sued if the other party is so inclined. You're basically open to issues whether cosigning or having it in your name only. Those of us old enough to remember, remember when you leased a car and it was registered to the financ/lease company? Well when THEY started getting named in liability cases of "YOU" driving "THEIR" car, they got that changed. Some institutions stopped leasing cars and financing used cars all together.

[Anonymous]

Thanks all for the notes.

Originally I had thought that I'd just get the loan myself and have my parents pay me, but that won't work out for insurance reasons. We ended up getting approved for a loan with myself as the buyer and my father as the cosigner, with my parents carrying the in s urance. Not as good of a rate as I hoped, but decent nonetheless. We purchased a vehicle a few days ago (2014 Ford Focus, 22k miles), and my parents seem quite satisfied with it. 

[Anonymous]

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@6speed8 wrote:

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@Anonymous wrote:

Don't cosign for loan. Do loan for vehicle in your name only and let ur parents drive vehicle. Have them pay car note and insurance if you want. Better then to cosign since most places will give higher interest rate saying one person credit is bad. With just your credit you can easily get 0-2.9% for 60 months depending on what car your parents planning to get

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Not a bad idea but it opens another door. Liability. Heaven forbid mom or dad have an accident that's their fault and hurt someone. I'm not saying it because of their age. I'm saying it matter of factly because I know people this has happened to. If the car is in your name, YOU are held to liability of it. You can be sued if the other party is so inclined. You're basically open to issues whether cosigning or having it in your name only. Those of us old enough to remember, remember when you leased a car and it was registered to the financ/lease company? Well when THEY started getting named in liability cases of "YOU" driving "THEIR" car, they got that changed. Some institutions stopped leasing cars and financing used cars all together.

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True only really need to worry if you have a property that has lots of equity in it. You can also have them buy higher insurance. If your worry u can buy the 100/300/100

[Anonymous]

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@Anonymous wrote:

Thanks all for the notes.

Originally I had thought that I'd just get the loan myself and have my parents pay me, but that won't work out for insurance reasons. We ended up getting approved for a loan with myself as the buyer and my father as the cosigner, with my parents carrying the in s urance. Not as good of a rate as I hoped, but decent nonetheless. We purchased a vehicle a few days ago (2014 Ford Focus, 22k miles), and my parents seem quite satisfied with it. 

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Not sure what states your in and how insurance work. In California as long as vehicle have insurance doesn't matter who name vehicle is register under and who's name insurance is under as long as the vehicle have insurance. Now if talking about liability. You will still be liable if car was in accident because your still register owner of vehicle. Which is weird now since your the main person why would they have your dad as cosigner when he's the one that have the bad credit. Can't think of any reason beside to charge you more in interest 

[Anonymous]

I'm in Florida, and I'm not sure about any state regulations, but the lender requires that either the owner or co-owner be the one with insurance on the vehicle. 

[Anonymous]

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@Anonymous wrote:

I'm in Florida, and I'm not sure about any state regulations, but the lender requires that either the owner or co-owner be the one with insurance on the vehicle. 

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Ahh in California just require car to be insured