My friend wants me to cosign a car loan for him. He doesn't have credit, I do. I am worried about what will happen if he doesn't pay. I know that I would have to pay if he doesn't, but what can I do? Will his credit score be affected if he does not pay but I do pay?
Please give me some tips or advice. Thanks.
2006-10-25 02:26:04 · 17 answers · asked by Dave 2 in Business & Finance ➔ Credit
How does this sound: I will be the name on the title of the car so if he doesn't pay I can report it stolen.
2006-10-25 02:37:22 · update #1
Do not co sign for anyone, EVER. If they don't pay, you have to.
2006-10-25 02:29:09 · answer #1 · answered by Anonymous · 2⤊ 0⤋
I understand that you want to help your friend out.
But the fact that you are nervous about the deal should be a warning to you. You obviously don't trust him. But you also don't want to lose a friend either.
The idea of having your name on the title, then reporting the vehicle as stolen is not going to work, as you would have to file a false police report.
To make matters worse, each state has slightly differant laws regarding title registration. In the event he doesn't pay, you may have to go to court and sue to recover the vehicle. Either way, it would be much easier to do of the car was in your name only.
But there are dangers there too...if he gets in a wreck or injures someone, you can be held liable because it's your car.
The simple answer is to not get involved. But if you do, get the car in your name ONLY and once it's paid off you can transfer the title to him.
2006-10-25 11:20:24 · answer #2 · answered by Anonymous · 0⤊ 0⤋
If he doesn't pay you will be expected to pay. As long as someone is paying, both credit scores will stay good. If the loan doesn't get paid and teh car gets repoed, it will go on both your credit scores which of course isn't good. As far as the title, if it is in both your names, that is tricky, because technically you both own it by being on the loan. I would get some legal help with that situation. Don't sign for someone unless you can take the fall! Good luck!
2006-10-25 09:41:13 · answer #3 · answered by ♥Amanda♥ 4 · 0⤊ 0⤋
Signing a contract holds you responsible. If you co-sign, and the primary person defaults, YOU pay.
His credit score will be affected if he doesn't pay.
My advice. If you trust him to pay, cosign (it's a very good thing you're doing). Remember that there's a difference between being a friend and being a 'personal bank'.
good luck
2006-10-25 09:28:57 · answer #4 · answered by words_smith_4u 6 · 0⤊ 0⤋
Whenever you co-sign, the payment record goes on both credit reports. So, if he doesn't pay, it makes you look bad. And, if you end up paying, he gets credit for it too! Co-signing for a friend, is the quickest way to lose that friend! I wouldn't do it!
2006-10-25 09:30:55 · answer #5 · answered by rebecca_sld 4 · 2⤊ 0⤋
I believe his crdeit score will be affected if he doesnt pay but i think as long as you pay if he doesnt yours wont be affected. then again as long as they are getting the money they have no reason to lower any credit scores. all i can tell you is before you sign make a contract with him that says if he doesnt pay you have every right to take the car you are paying for and he must reimburse you for every dime you paid on his behalf
2006-10-25 09:35:24 · answer #6 · answered by rdoggg19 2 · 0⤊ 1⤋
If you have doubts about him and you don't mind losing him as a friend then sign the papers.
Personally i would not sign if i had any doubts at all.
If he defaults (not to say he will) then it will affect your credit rating.
The credit company can have it marked against him if he defaults, even if you have to take over the payments, as guarantor the car will not belong to you if you have to pay for it.
2006-10-25 09:33:52 · answer #7 · answered by Bladerunner (Dave) 5 · 0⤊ 0⤋
I would be leary of co-signing for a friend. If he doesn't pay it becomes your problem! What if something happens to your friendship and he stops paying to spite you? What if you decide to make a BIG life changing purchase (a house) and then he stops paying - you run the risk of losing a lot more then your friend.
I would recommend your friend ask a family member to co-sign for him.
2006-10-25 10:04:11 · answer #8 · answered by family_matters 3 · 0⤊ 0⤋
If you co-sign and he doesn't pay for it, guess who gets the bill? YOU! His credit will be affected by the non-payment and yours will too. You're credit could be destroyed if he can't afford the payments.. It's not worth the risk to co-sign for anyone (unless it's family and you know they will pay).
2006-10-25 09:30:29 · answer #9 · answered by mustangsally76 7 · 1⤊ 0⤋
if he doesn't pay you will. it's YOUR loan too! that's why they call it "cosigning" You name is all over that loan. If he skips out, you are left holding the bag.
his credit will only be affected if you fail to pay. the lendor doesn't care who pays, just as long as someone is. if both of you fail to pay then they will go after both of you.
2006-10-25 09:32:00 · answer #10 · answered by Anonymous · 1⤊ 0⤋
You get stuck with the bill.
Period.
If you pay and keep it in good standing, his credit will be positively affected.
Neither of you pay, both of your credit reports will be affected adversly!
** I would reccommend him refinancing the vehicle in his name only.*** Get out while you still can!
2006-10-25 10:12:39 · answer #11 · answered by Anonymous · 0⤊ 0⤋