I bought a car last year, but my mom was the person who "really" bought it meaning she signed on for the loan. I pay for the car every month. Could I still sign on as a co-signer to build credit? I'm 21 and the loan of the car was like $42,000. I don't think the bank would give me a loan for that much, so I had my mom sign on. I also heard that if you're a student and you have a few big purchases (such as cars) then your financial aid can become lower, one of the other reasons I didn't sign on. Is this true?
2006-08-08 06:22:09 · 6 answers · asked by pseudo_entropy 2 in Business & Finance ➔ Credit
Part 1: If your lender allows it and your mother agrees to it, you could be added to the loan as a co-buyer which will give you a credit score for the loan.
Part 2: Financial aid is based more on INCOME than on how you choose to spend that income. They will look at the equity in the vehicle (what it is worth minus what is owed) to determine the value and if the value is high enough, that can have an impact on your student aid. Reality is, though, that most of the time, a vehicle depreciates in value faster than you repay the loan, which is why anyone who finances a car should have GAP protection.
2006-08-08 06:30:11 · answer #1 · answered by Terry D 2 · 0⤊ 0⤋
Wow big question and a lot of it depends:
Since it has been a year then maybe you could try a refinance and see if you and your mom could both be on the car. Especially since you know you can make the monthly payments and your mom is already on there. If they let you be on there then this will help your score. This may also decrease the loan amount because you have been makng on time payments for the past year.
Now with the financial aid. It s determined by your income taxes return So lets say you make a big purchase like a car. There are some things that are tax deductible which will lower your adjusted gross income. This will in fact help you to get more financial aid because if it is lower than you have more financial need. Now if for some reason you do not make payments on time or at all on your car then it will affect your credit which will affect your ability to get private loans but otherwise I think you will be ok.
2006-08-08 06:32:49 · answer #2 · answered by Cris 2 · 0⤊ 0⤋
If the original loan is in you mom's name you can not change that unless you (both) negotiate a new loan and terms. The best way to get a credit history going is for parents to secure loans, such as yours, in the minors' (that is you I assume) name. However, unless you have a way to show you can pay for it, no lender will give you a loan as such. Your parents would have to put a collateral ( e.g., $30,000 savings account) to secure a loan for you, with your name on it. This type of loans are very inexpensive, meaning low interest rate, but your parents could not use their money until you pay for the loan (their money is actually available at the same rate you pay the loan.
As to the second part of the question - student aid, the answer is easier: You can not fool Uncle Sam and it is getting tighter. If the debt is on your name they will also want to know how you pay it. If it is on your mom's name it is just another debt for her. Your income or sources of funds is the primary consideration for your student aid. However, the fact your family may have "too many debts" will not make your eligibility greater. There are formulas to establish eligibility and credit worth: income to debt ratios, poverty levels set by the fed, etc. Check with your school about your individual circumstances - no one will help you to beat or fool Uncle Sam.
2006-08-08 06:46:03 · answer #3 · answered by 'stavo 2 · 0⤊ 0⤋
Umm...
what the hell is wrong with you? You're 21 and you bought a $42,000 car?!?
Are you mentally retarded or something? Get rid of the car, buy a cheap car for cash, save your money until you can buy a car you really want in CASH, and start saving for your retirement in the meantime; just $75/month invested results in $1 million by the time you're 50.
You pay a monthly payment on a $42,000 car loan, plus comprehensive and collision insurance, plus gas at $3+ per gallon. That's a lot of money for any 21-year-old. Heck, I'm 32 and that's a lot of money for me!
If you have a car you bought with cash, you have $0 car payment and you only need liability car insurance which can save you hundreds of dollars each month. You can save your money and pay cash for a really nice car in no time. I guarantee you that while you are saving your money, you'll come to the realization that buying that $42,000 car isn't as important as you think it is right now.
2006-08-08 06:36:53 · answer #4 · answered by Anonymous · 1⤊ 0⤋
Making your payments on time and maintaining a stable profile i.e. longtime employment history, not having more than 2 or 3 addresses within 4 or 5 years and not extending yourself beyond your debt to income ratio really help to build your credit. Co-signing on a loan for somebody only helps the other person, not you.
2006-08-08 06:30:26 · answer #5 · answered by Serious Business 4 · 0⤊ 0⤋
youll find some help on loans and much more on this site
2006-08-08 06:30:47 · answer #6 · answered by Anonymous · 0⤊ 0⤋