I currently have a cosigner who has two other new car payments he is taking care of (totalling to around $50k). I would like him to cosign for my $35k auto loan, would this be detrimental in any way?
Is there a maximum "loan limit" one can have?
Does having a cosigner "lessen" the amount of credit that is given on my behalf (I have no credit history)?
2006-11-26 16:07:01 · 5 answers · asked by Anonymous in Business & Finance ➔ Credit
Essentially, someone with two car loans that are around $50-60k total and --cosigning-- for my auto loan which is another $35k, it's a total of $85k~ which is like buying a top end BMW or Mercedes. Hopefully that clears some things up.
2006-11-26 16:14:57 · update #1
When someone co-signs on a loan, they are merely garaunteeing the loan in case the primary person fails to make payments. There are financial ratios that are calculated that determine how much the bank can "safely" loan a person without much risk of default. The bank takes into account credit history as well, so if you both have good credit and adequate income, there should be no problem. Your credit will receive the same amount of "good points" even if you didn't have a co-signer. The co-signer will benefit as well. You will definitely need a co-signer if you have never had credit extended to you before. The only part of the arrangement that will possible be detrimental to the co-signer is that if he/she wants to get additional loans, he/she may no be approved because of the outstanding liabilities that they have already gotten. So yes, depending on income and credit, there is a maximum loan limit you can get. This limit is variable based on what the loan is for, as well. Unsecured loans, like credit cards, personal loans, and car loans (which are typically considered unsecured since cars depreciate faster than the loans are paid off) have stricter limitations on amount. Whereas secured loans, like mortgages, are somewhat "easier" to obtain because the value typically increases over time and the bank can collect the value of the loan is the person defaults.
2006-11-26 16:46:22 · answer #1 · answered by candy 2 · 0⤊ 0⤋
An unsecured loan probably won't get more than a few thousand dollars. If you own your own home, I'd suggest a Home Equity Line of Credit. The interest rate will be lower than on an unsecured loan. Unsecured loans usually have higher interest rates than any type of a secured loan. Another thought is a credit card is a type of unsecured loan...try and find one with a low rate.
2016-05-23 07:44:05 · answer #2 · answered by Anonymous · 0⤊ 0⤋
A ton of factors will be taken into consideration when you are applying for a loan. The requirements vary from company to company.
Sounds like you are worried that your co-signer friend might have too much debt, which in turn, might get in the way of your chances for getting this loan?
Here is what they will be looking at....his monthly income .vs his debt payouts each month. The 2 other car payments he has might TOTAL 50k, but its not what he is paying out each month, and its broken down monthly.
They will look at his credit report, total up all his monthly credit card payments, home loans, car loans and come up with a figure. Then this figure is going to total what percentage of his monthly income? If it ends up exceeding more than 60% of his monthly income, this begins to look like he is heavy in debt. Then add on your new loan payment amount (if you somehow botch the deal and cant pay).
They will look at his credit like it was HIM taking out the loan, but its going to be on YOU to pay it. And you are only being asked for a co-signer because you have no credit at all. So this is your first shot, don't blow it or it will cause you ALOT of headache down the road... not to mention your friend because the payments are going to show up on his credit report also like he's making them, even though YOU are.
Your amount of loan could possibly be reduced or limited based on his credit worthiness, in the effect that if his debt to credit ratio is what that company sees as too high, they might say they can only give out 10k instead of 15k for a loan...
And if - in the past 3 months - he has gone 30 days late on a payment, OR something has went into collections OR a lien or judgment has shown up on his credit report then you can kiss this loan goodbye.
If I have confused you, please feel free to ask more questions
2006-11-26 16:45:52 · answer #3 · answered by Lauren X 2 · 1⤊ 0⤋
unless this co-signer is a millionaire they won't be able to sign. they can't borrow more than they make.
if you need a cosigner for a car that is $35k then you are living WAY beyond your means and you will fall and collapse in time and ruin their credit and yours.
2006-11-26 16:10:18 · answer #4 · answered by Anonymous · 0⤊ 1⤋
As long as he the collateral he can have as many loans as he likes, if he doesn't pay the bank will repossess everything he has. including you car..
2006-11-26 16:41:19 · answer #5 · answered by glasgow girl 6 · 0⤊ 1⤋