My good friend has to buy a car asap. He does not have very good credit due to past family problems. He has just graduated college a month ago and started a new full-time job so he now has a steady income flow. Due to these circumstances, he has asked me to co-sign. Then after a year he will re-finance his car and put it in his name only. Is this a bad idea?
2006-07-13 07:46:50 · 36 answers · asked by LoLo 1 in Cars & Transportation ➔ Buying & Selling
It's a very bad idea. You are risking financial responsibility and possible damage to your own credit rating for someone who has a track record of financial difficulties. The reasons why do not matter. If he had family issues in the past, it is very likely he will have them again in the future.
Additionally, you have no guarantees that he will be in any better financial position in a year to refinance it and even if he is, he will have no legal obligation to do so.
2006-07-13 07:55:52 · answer #1 · answered by Lubers25 7 · 4⤊ 0⤋
Yes, it is a VERY bad idea! No, you should NOT do it.
Here's the question you should ask yourself: "If a bank that is in the business of lending money won't take a risk on this guy, why should I?"
You should also ask yourself: "If the worst happens, will I be able to afford to make the payments if he can't or won't?" (Keep in mind that you won't have the car, and may not be able to get it, either.)
There's no way that you can force him to keep to his end of the deal to re-fi in a year. He might be in worse shape then. Heck, you could be paying for the car by then!
Lastly, keep in mind that if you do co-sign, it will show up on your credit report too. It will probably bring down your credit score and will increase your total debt ratio. These are both bad things and will happen even if he makes all the payments on time. If you needed to buy a car yourself in 6 months, you might not be able to because your credit is over-extended by co-signing on that other loan.
Just say, "I'm sorry, but it is my personal policy to NEVER co-sign on a loan with ANYONE."
A TRUE friend will understand this and accept it as a good policy. If he gives you any grief, then he's not much of a friend.
2006-07-13 08:27:31 · answer #2 · answered by Bostonian In MO 7 · 0⤊ 0⤋
No no no.....do not co-sign for anyone that is not your spouse, or child...and that's still questionable. Credit can be ruined in a matter of about three months.... If he doesn't make the payments its YOU they will come after....and its YOUR credit that will go down the drain along with him. If he can't get the financing, then he obviously cannot afford the car.
Now, there is a new product on the market that is getting pretty popular in used car lots. It is especially for people with horrible credit, but they need a second chance and a car too...so its a devise that is planted in the car..then if their car payment isn't made it doesn't allow the car to run, at all. So you have to make your car payment or else you really will have no ride. So I'm sorry to hear of your friends situation, but don't take his burden on yourself..especially with something as precious as your credit rating.
2006-07-13 08:09:00 · answer #3 · answered by Sharlala 5 · 0⤊ 0⤋
RED FLAG!!!! BAD IDEA is written all over this.
He's a friend, not family just a friend. You have to see if they will be able to pay for the car, becuase its going to mess up your credit each time they are late on payment or don't pay. I mean theres got to be a reason he hasn't asked his family first. If he has bad credit, that means he isn't going to pay on the car or he is going to take for ever to make his payments on the car.
I don't care how much money he is going to make, the fact is right no he can't get a car so I wouldn't do it.
2006-07-13 07:50:56 · answer #4 · answered by Tarabeara 4 · 0⤊ 0⤋
yes, It would be easier for you to put cash down then your signature. Bad credit is something that one has put themself in and they have to pull themself out.
Re-financing a car is easier said then done and 12 payments is not going to make a big difference in credit worthlyness. 24 payments will make the difference.
Think of it this way...
It is a lot easier to recoup $2000 then it is to rebuild your credit.
sounds like he should just buy a "cheap" car for cash now and save up money from this job and buy a better car later.
2006-07-13 08:50:32 · answer #5 · answered by freeway823 2 · 0⤊ 0⤋
Unfortunately friends, even very close friends, become the enemy when it comes to money. A true good friend would never put the question of money before you. However, if you feel this is something you really want to do, ask yourself this question? Can I afford to make the payments, if I co-sign?
I co-signed for my son, not a friend, and purchased a trans-Am
that I did not want.
e very careful in your decision. Hope this helps you decide.
2006-07-13 08:19:21 · answer #6 · answered by Anonymous · 0⤊ 0⤋
Horrible idea. 100% guarantee you will regret it. Why does he think he can refinance it on his own in 12 months. Won't happen, can't happen. I've been a credit manager for 20 years, and I can promise you, you would regret this, and there is virtually no chance he will refinance the car, because it would cost him more money to do so, and the payment would go up, and that is what he will tell you in 12 months.
2006-07-13 07:52:53 · answer #7 · answered by tsmitha1 3 · 0⤊ 0⤋
It is a very bad idea, most banks i have talk to dont like it when friends co-sign on loans, also if for some reason he ends up not paying you will get stuck with the car loan, Again this is a very bad idea.
2006-07-13 07:52:10 · answer #8 · answered by wolf 2 · 0⤊ 0⤋
Only do this if you are prepared and able to pay for the car payments yourself if he defaults. The minute he doesn't pay - it's your credit that's at stake - his is already bad. You will have to pay for the payments he misses in order to maintain your credit. If it comes to that, are you prepared to lose your friendship? You'll be collecting payments from your friend, and there's nothing friendly about that. The old saying, "Never do business with family or friends" is great advice - unless you are prepared to lose out.
2006-07-13 07:52:05 · answer #9 · answered by Ambrosia 3 · 0⤊ 0⤋
Your chum is the sufferer of a con-artist. yet by technique of co-signing the non-public loan, the banks have each and every top to bypass after her for the funds, in spite of the undeniable reality that she doesn't personal the motor vehicle. existence LESSON: under no circumstances CO-signal FOR some thing! Banks, which make their living issuing as many loans as they could, informed this guy that they couldn't provide him a private loan. Now your chum is stuck making funds for a motor vehicle she will't locate, for a guy she doesn't pick to locate.
2016-12-01 05:26:26 · answer #10 · answered by ? 2 · 0⤊ 0⤋