A close friend asked me to cosign on 70K car for 4 yrs. And she going to pay me 3k on the day that its purchased. But Im a little worried about the deal even thou I really need the money. I know that her and her husband are financially fit job wise, but they don't have good credit. She said based on their credit score they have to put down 20K to get the car and they don't want to do that. I am just wonder is 3K a little cheap for the liability that I may face if they don't pay. Can someone help me with the pros and cons of this deal. Should I or not. Advice please...
2007-11-21 09:29:28 · 15 answers · asked by Mesosweet 2 in Business & Finance ➔ Credit
Its not the ideal that they can't afford a car because they have a 30k car already, its mostly for the luxury
2007-11-21 10:01:54 · update #1
Very, Very bad idea.
cons:
- They have money and have bad credit. That means they don't pay their bills even with the financial ability to do so.
- They now want a $70,000 fun car. Not need but want.
- They don't want to part with $20,000 as a down payment. That means they don't want to put anything into the car.
- They are going to bribe you with $3000. $3000 to do something you wouldn't normally do. For a reason.
- The reason credit history is so important is that past behavior is indication of future behavior. A psychological well known proven fact. This mean they are going to trash your credit and you'll probably end up paying for their car.
- They are just using you.
- You'll end up losing friends.
- They need to stand on their own feet, so to speak. This is their marriage and their finances and I smell more trouble needing to drag someone into situations like this. They made their credit history on their own and need to live with it on their own.
- They may not have as much money as you think. A lot of people who want to "keep up with the Jone's" are really in debt and not as well off as they seem. Don't want to put a down payment may mean they just don't have it.
- Don't assume these good friends won't sell you down the river to get what they want. It's already started. Even if they don't mean to at first. This bill will come last on the list and they already have bad credit.
- I think you already know this is a bad idea.
- If the lenders don't want to take the risk on loaning them all the money, neither should you.
pros:
none
2007-11-21 17:22:55 · answer #1 · answered by gogo7 4 · 0⤊ 0⤋
DON'T DO IT.
There's a reason they have bad credit. Sometime in the recent past, they've either been late on payments, had a bad debt, or mismanaged their money. It can happen again.
You don't want any part of that. If they were purchasing a used Toyota or something, maybe you might take the risk. But a $70k luxury car??? It's just too risky.
Tell your "close friend" that you are sorry, but you just can't take the risk of assuming a 70k luxury car loan. They may be good for it, but for all you know, one of them might not be able to work in the next 4 years, or they might get laid off, and then you are the one stuck with the bill. And since so little is being put down, that means you'll never be able to sell the car on the open market without taking a loss, until it's nearly paid off. That's why the bank or dealer wants $20k down, so if it's reposessed, they can still re-sell it without taking the loss.
2007-11-21 11:02:17 · answer #2 · answered by Uncle Pennybags 7 · 0⤊ 0⤋
Can you afford to pay for a 70K car that you will never drive?
If the bank won't lend the money and banks are in the business of loaning money then you would be crazy to do it.
As the co-signor you will be 100% responsible for the balance of the loan when (that is not IF it is when) your friend does not make the payments. They could get into an accident and total the car. The insurance may not pay off the entire balance owed, you will owe that. The car will get repossessed and sold at auction when your friend falls behind on the payments. You will be responsible for the difference of what is owed on the loan and what the car sells for at auction. With a 70K car it will probably sell for less than 10% of the balance owed.
Do not do it. Suggest that your friend take the $3000 and buy a used car to drive while they bank the amount they would be making in payments until they have the $20,000 in cash so they can put down their own deposit and get their own loan.
Never cosign for anyone for any reason, not even your own parent or your own child.
2007-11-21 10:00:11 · answer #3 · answered by ebosgramma 5 · 2⤊ 0⤋
Do NOT do it. There is a reason they have bad credit, and instead of getting a $70k car, they need to be looking at a car that they don't need a cosigner for. Suggest a Honda Accord or even a Civic...they might be in a good financial situation with good incomes, but obviously they aren't in a good enough financial situation to be getting a $70k vehicle.
2007-11-21 09:38:14 · answer #4 · answered by Gage's Mommy :-) 5 · 2⤊ 0⤋
Nopenopenopenopenopenopenopenopenope!!!!!
Regardlesss of their financial health you will be on the line for this debt if they don't pay!
Why 70k? Cripes they can budget and buy an el-cheapo used car for 1k. They're living beyond their means. Doesn't mean that you have to too.
How many friendships and family members have fought and lost loved ones because of machinations like this!! Don't go there!! If they're true friends, they'll understand.
All you have to say is simply, "I'm sorry, I'm not comfortable doing this". No matter what they come back with .. be a broken record and keep saying it.
2007-11-21 09:48:41 · answer #5 · answered by north o 2 · 2⤊ 0⤋
Don't do it!!! Contrary to what she told you, there are some lenders who will finance 100% of the loan even with bad credit, although her monthly interest rates will be higher than someone with better credit. The only "pro" that I see here is you will get your 3k. The cons of this deal is, if she defaults on her loan, the lender can come after you because you are the co-signer and to me that's a hell of a lot more trouble to go through.
2016-05-24 22:40:23 · answer #6 · answered by ? 3 · 0⤊ 0⤋
DO NOT co-sign this loan. I am not sure about your relationship with this friend but you will be liable if they default, and they have bad credit. There is obviously a reason for them having bad credit. Receiving $3,000 for this committment and being on the hook financially for $70,000 is not a good deal. This will destroy your credit so don't walk but run from this deal. There are no pros to this deal. Tell you friend you have thought about it and have decided against it.
Good luck!
2007-11-21 09:39:47 · answer #7 · answered by Michael L 2 · 3⤊ 0⤋
Being a co-signor on a loan means you will become legally responsible for paying the lender if the signor( your friend ) cannot pay the lender.
Being a co-signor means you will take the debt very seriously. Could you afford to make the monthly payments right now?
2007-11-21 14:29:00 · answer #8 · answered by !!! 7 · 0⤊ 0⤋
Do not co-sign anything...I did that for a friend and they couldn't pay for it and I ended up with a repo on my credit and owe the bank $8k out of my own pocket. They are unable to get the loan themselves for a reason...unless you are as rich as Bill Gates and can afford to pay the loan if they can't....don't consider yourself a lending company. One way to lose this friendship is to co-sign for the car. If she walks away from you because you didn't co-sign...you got your answer....she was never your friend and it cost you nothing....later if she doesn't pay, you'll lose the friendship and owe a large amount of money you may never recover from.
2007-11-21 09:40:50 · answer #9 · answered by Matarc 3 · 3⤊ 0⤋
Under no circumstances should you ever cosign. You WILL end up paying for the car yourself.
2007-11-21 16:37:39 · answer #10 · answered by Debt Slayer 4 · 0⤊ 0⤋