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Cosigning for a personal loan

Your FICO® Scores can impact your loan interest rates, terms, approvals and more.
New Member

Cosigning for a personal loan

I'm looking for some advice on how to handle my wifes large amount of credit card debt that she acculumated before we were married. Between all her credit cards she has to pay a minimum of $1500 a month (she pays more when she can). 

 

I thought about her applying for a personal loan to pay off the $40k but her credit scores are only fair (I have a personal loan with SoFi but they require good credit). I think the easier solution would be to cosign for a personal loan but after some research and discussions with a financial advisor it would go on my credit report as an account and increase my DTI. Any thoughts on this as I believe this will be a monthly cost savings and could paid it off in 60 months but I don't want my credit scores to drop like a rock after working so hard on them.

 

Wife- Annual income of $41,000

DTI- 44%

Equifax- 657

Transunion- 681

Experian- 646

 

 

Me- Annual income of $137,000

Equifax- 795

Transunion- 816

Experian- 806

Message 1 of 9
8 REPLIES 8
Established Contributor

Re: Cosigning for a personal loan

I would not take out a new loan. If you want to help, push an extra $100 to each of her CC's every month.

If you take out a loan remember that extending the time to lower payments cost in interest.

*

If you take out a $40,000 - 5/yr - 10% loan.

Payments would be 850/mo, cost $11,000 in interest, and not be paid for 5 years

*

If you pay the $1,500/mo at the CC average APR of 17%.

It will be paid off in 3 years and cost a few hundred less in interest.

*

If you add 500-600 a month to the current payments you could save 5,000 in interest and

have it paid off in about 2.5 years.

*

I would pay the 1500+

Do not lower your payment amounts just because the minimums due start to drop.

3-years from now she can be CC debt free.

 

FNBO 2% Cashback Visa (20k) / Bank of the West Cashback MC (20k)
US-Bank Cash+ (15k) / FNBO Travel Elite (15k) / Citi Double Cash (18k)
Ficos : 840 / AAoA : 9 yrs / AoOA : 23 Yrs / AoYA : 3
Message 2 of 9
Valued Contributor

Re: Cosigning for a personal loan


@Kforce wrote:

I would not take out a new loan. If you want to help, push an extra $100 to each of her CC's every month.

If you take out a loan remember that extending the time to lower payments cost in interest.

*

If you take out a $40,000 - 5/yr - 10% loan.

Payments would be 850/mo, cost $11,000 in interest, and not be paid for 5 years

*

If you pay the $1,500/mo at the CC average APR of 17%.

It will be paid off in 3 years and cost a few hundred less in interest.

*

If you add 500-600 a month to the current payments you could save 5,000 in interest and

have it paid off in about 2.5 years.

*

I would pay the 1500+

Do not lower your payment amounts just because the minimums due start to drop.

3-years from now she can be CC debt free.

 


First comment their huge difference in your income and hers.  If she can afford to continue paying the $1500 let her but if you can pay an extra $1000 a month from your money. You dont want to set her off into poverty while you lead the life of luxury.   You can build up resentment.  My oldest son was married to a woman who made $75K a year and got $40K from her parents .  My oldest made $30K.  She had him paying 1/2 of household expenses.  He ended up eating Ramen noodles at work every day with a glass of water and having just enough gas money to go and from work.   It ended up with a hatered toward her and they divorced. She was buying expensive toys and gifts for her kids from prior marriage while he was woried about food.  Money in marriage I always believed was a community resource. It goes with trust.   Marrgiage is not about you it is about team us. 

Message 3 of 9
Senior Contributor

Re: Cosigning for a personal loan


@Backwoods wrote:

@Kforce wrote:

I would not take out a new loan. If you want to help, push an extra $100 to each of her CC's every month.

If you take out a loan remember that extending the time to lower payments cost in interest.

*

If you take out a $40,000 - 5/yr - 10% loan.

Payments would be 850/mo, cost $11,000 in interest, and not be paid for 5 years

*

If you pay the $1,500/mo at the CC average APR of 17%.

It will be paid off in 3 years and cost a few hundred less in interest.

*

If you add 500-600 a month to the current payments you could save 5,000 in interest and

have it paid off in about 2.5 years.

*

I would pay the 1500+

Do not lower your payment amounts just because the minimums due start to drop.

3-years from now she can be CC debt free.

 


First comment their huge difference in your income and hers.  If she can afford to continue paying the $1500 let her but if you can pay an extra $1000 a month from your money. You dont want to set her off into poverty while you lead the life of luxury.   You can build up resentment.  My oldest son was married to a woman who made $75K a year and got $40K from her parents .  My oldest made $30K.  She had him paying 1/2 of household expenses.  He ended up eating Ramen noodles at work every day with a glass of water and having just enough gas money to go and from work.   It ended up with a hatered toward her and they divorced. She was buying expensive toys and gifts for her kids from prior marriage while he was woried about food.  Money in marriage I always believed was a community resource. It goes with trust.   Marrgiage is not about you it is about team us. 


+1

Starting Scores FICO 8 (Feb '18):
EX- 519, TU- 530, EQ- 545

Current Scores



Message 4 of 9
Valued Contributor

Re: Cosigning for a personal loan

Keeping the money together or separate is a question for the ages.

Once you are on board as a couple, I see it as family debt.

 

This would be a great time to work on getting a budget for the family. The hard part will be getting a 'spender' to convert to a 'saver' given her history. The sooner the debt is paid off the sooner the family can enjoy the benefits of being out of debt.

 

Good luck!

Message 5 of 9
New Member

Re: Cosigning for a personal loan


@19eighty5 wrote:

@Backwoods wrote:

@Kforce wrote:

I would not take out a new loan. If you want to help, push an extra $100 to each of her CC's every month.

If you take out a loan remember that extending the time to lower payments cost in interest.

*

If you take out a $40,000 - 5/yr - 10% loan.

Payments would be 850/mo, cost $11,000 in interest, and not be paid for 5 years

*

If you pay the $1,500/mo at the CC average APR of 17%.

It will be paid off in 3 years and cost a few hundred less in interest.

*

If you add 500-600 a month to the current payments you could save 5,000 in interest and

have it paid off in about 2.5 years.

*

I would pay the 1500+

Do not lower your payment amounts just because the minimums due start to drop.

3-years from now she can be CC debt free.

 


First comment their huge difference in your income and hers.  If she can afford to continue paying the $1500 let her but if you can pay an extra $1000 a month from your money. You dont want to set her off into poverty while you lead the life of luxury.   You can build up resentment.  My oldest son was married to a woman who made $75K a year and got $40K from her parents .  My oldest made $30K.  She had him paying 1/2 of household expenses.  He ended up eating Ramen noodles at work every day with a glass of water and having just enough gas money to go and from work.   It ended up with a hatered toward her and they divorced. She was buying expensive toys and gifts for her kids from prior marriage while he was woried about food.  Money in marriage I always believed was a community resource. It goes with trust.   Marrgiage is not about you it is about team us. 


+1


So far no there is no hatred Smiley Happy. I currently pay all of the household bills (I'm pretty self sufficient plus I'm a control freak) and my wife bills her bills (plus pays for some groceries and make sure she keeps her gas tank on full).

 

 

Message 6 of 9
Valued Contributor

Re: Cosigning for a personal loan


@Flexfanatic wrote:

@19eighty5 wrote:

@Backwoods wrote:

@Kforce wrote:

I would not take out a new loan. If you want to help, push an extra $100 to each of her CC's every month.

If you take out a loan remember that extending the time to lower payments cost in interest.

*

If you take out a $40,000 - 5/yr - 10% loan.

Payments would be 850/mo, cost $11,000 in interest, and not be paid for 5 years

*

If you pay the $1,500/mo at the CC average APR of 17%.

It will be paid off in 3 years and cost a few hundred less in interest.

*

If you add 500-600 a month to the current payments you could save 5,000 in interest and

have it paid off in about 2.5 years.

*

I would pay the 1500+

Do not lower your payment amounts just because the minimums due start to drop.

3-years from now she can be CC debt free.

 


First comment their huge difference in your income and hers.  If she can afford to continue paying the $1500 let her but if you can pay an extra $1000 a month from your money. You dont want to set her off into poverty while you lead the life of luxury.   You can build up resentment.  My oldest son was married to a woman who made $75K a year and got $40K from her parents .  My oldest made $30K.  She had him paying 1/2 of household expenses.  He ended up eating Ramen noodles at work every day with a glass of water and having just enough gas money to go and from work.   It ended up with a hatered toward her and they divorced. She was buying expensive toys and gifts for her kids from prior marriage while he was woried about food.  Money in marriage I always believed was a community resource. It goes with trust.   Marrgiage is not about you it is about team us. 


+1


So far no there is no hatred Smiley Happy. I currently pay all of the household bills (I'm pretty self sufficient plus I'm a control freak) and my wife bills her bills (plus pays for some groceries and make sure she keeps her gas tank on full).

 

 


That is good to hear that it isn't causing friction.  More often than not, that will take down couples in a hurry.  Good for you.  I hope you are able to resolve the financial issues though.

                               

Total Credit: $240,100Credit Utilization: 1%AAoA: 5 years, 7 monthsInstallments: Car Lease, Marcus LoanNegatives: 0

LOWES-35k | BOA-32.5k | AMEX-30k | DISC-27.1k | ALLIANT-25k | NFCU-25k | BARC-15k | BBUY-12k | CHASE-10k | WAL-10k | CITI-9.7k | PENFED-9.7k


Message 7 of 9
Contributor

Re: Cosigning for a personal loan

Not sure what the bread winner here has as far as bills go but with my current finances if there was that much of an income difference I'd put my spouse as an authorized user on my cards that they'd use (which would help their credit score). Pay all bills myself, grocery, all of it... and have them use their salary to pay down their debts. Possibly even stack a little more cash on top ~~~ or you can let them spend their salary and put some cash directly to their debts from your salary.

 

To be honest I currently make about twice as much as my spouse and I have been the sole one paying down their student loans. Then the annual tax refund myself and spouse keep a little and use the rest to pay down their student loan debt.

 

Currently, my spouse uses their salary for the groceries and stuff the kids need. I pay all other bills and their student loans (phones, electric, mortgage, car insurance, personal property taxes, water, tv/internet, etc.). I still manage to buy a lot of random stuff though and my spouse is more frugal.


EQ 816, TU 820, EX 804
Message 8 of 9
New Member

Re: Cosigning for a personal loan


@ch3cker wrote:

Not sure what the bread winner here has as far as bills go but with my current finances if there was that much of an income difference I'd put my spouse as an authorized user on my cards that they'd use (which would help their credit score). Pay all bills myself, grocery, all of it... and have them use their salary to pay down their debts. Possibly even stack a little more cash on top ~~~ or you can let them spend their salary and put some cash directly to their debts from your salary.

 

To be honest I currently make about twice as much as my spouse and I have been the sole one paying down their student loans. Then the annual tax refund myself and spouse keep a little and use the rest to pay down their student loan debt.

 

Currently, my spouse uses their salary for the groceries and stuff the kids need. I pay all other bills and their student loans (phones, electric, mortgage, car insurance, personal property taxes, water, tv/internet, etc.). I still manage to buy a lot of random stuff though and my spouse is more frugal.


I'm going off topic a bit but I'm interested in the authorized user on my credit cards. I did not realize that having my wife as a authorized user could help her credit score. Funny because I was just looking at switching over to a Citi 2% cash back card.

Message 9 of 9