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Will a co-signer get it approved?.

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Creditplz
Valued Contributor

Will a co-signer get it approved?.

my brother wants to get a car on a 1 pay lease, I offered to co-sign since he works for me and I'll be responsible for making sure the cars insured.. 

 

I know, I know co-signing is a touchy subject but he has had a divorce and some medical issues that resulted in him with a 640 Fico8 and 610 auto enhanced... 

 

Will my co-sign overturn his denial?. I will still only co-sign only on the condition of a 1 pay lease... so it mitigates the risk.. 830Fico8, auto leases/finance range from $40k-170k paid..

 

is a co-signer looked at more strictly?. He has a repo from during his divorce. 22k left on the balance.. he is trying to settle it soon.

Message 1 of 7
6 REPLIES 6
TattnallTrio
Frequent Contributor

Re: Will a co-signer get it approved?.

I have a few ideas on this and this is just my opinion and hopefully others on here will help you make an informed decision. 

I've never heard of a 1 Payment Lease but a few credit unions may set it up where you pay interest only payments and a balloon payment at the end. This may depend on LTV too. 

We know with his challenged credit the rates will be higher even with you on the loan. Would you consider putting the vehicle solely in your name? Joint loans outside of a marriage usually end in hard feelings. You have faith in him and know his ability to pay BUT what if something happens and he is forced into bankruptcy? He will have to include all debt and you will get a beautiful "Account included in bankruptcy" mark on your credit. We don't know the future but this can happen. 

Lastly, I think leasing is the most expensive way to own a car. I worked at a new car dealer and leasing was suggested because the person only focuses on the payment instead of the purchase price of the vehicle and what the dealer says its worth at the end of the lease. I'm not as familiar with the Money Factor but that is the cost of borrowing during a lease. Dave Ramsey once said it usually equals about 13% (not sure if that was per year or for the entire term) 

 

I think purchasing the vehicle and selling it for as much as possible whenever you guys decide to get rid of it will probably be the best way to not spend more than you have to. As far as the "1-payment lease" I don't know. 

Message 2 of 7
4sallypat
Valued Contributor

Re: Will a co-signer get it approved?.

1 Pay leases are a great value as you pay up front for the lease in a lump sum making the MF (lease interest rate) low and the risk low to the leasor.

 

I would not co-sign as your score is much higher than your brother's score and would make sure that the car is taken care of (physically & insurance) as lease returns may become a sticking point.

 

Just make sure the dealer does not take money for a security deposit (which never gets returned should the car get totalled or stolen).

If they offer MSD (multiple security deposit), put in as much as possible to further reduce the MF.

 

Lastly, make sure the closed end lease states that you are guaranteed to buy it out at the end will not change value if you decide to buy it out.

Lately with the huge used car upside down, the lease buy out terms for some brands have changed to discourage buy out by the leasee.

 

Message 3 of 7
Creditplz
Valued Contributor

Re: Will a co-signer get it approved?.

Thank you Sally, thank you GA! 

yeah I'm not worried about the BK aspect since it'll be a 1 pay and obviously not default.. I talked to my broker friend, he said have him put down 2 MSD for my security interest... which I don't mind since I always do max MSD on BMW (7). 


Gieco would be on autopay haha, he doesn't drink so I don't have to worry about a total loss not covered

Message 4 of 7
Harvey26
Valued Contributor

Re: Will a co-signer get it approved?.

@Creditplz Sounds like your super confident in your brother which is a good thing. Have you tried adding him as AU on some of your older cards to help boost his score to see if maybe he can qualify on his own after that and then if he cant then make co-signing your next option. Best of luck! Keep us updated

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Message 5 of 7
Creditplz
Valued Contributor

Re: Will a co-signer get it approved?.

Side note** 

 

he was approved without me... we both walked out with new cars though... bank took his down payment into account after it was originally denied and F&I manager called the bank to overturn the denial.

Message 6 of 7
Loquat
Moderator Emeritus

Re: Will a co-signer get it approved?.


@Creditplz wrote:

Side note** 

 

he was approved without me... we both walked out with new cars though... bank took his down payment into account after it was originally denied and F&I manager called the bank to overturn the denial.


@Creditplz Very nice!  Congrats to you both and happy to hear that it worked out. 

Message 7 of 7
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