Current Events > Financial experts of CE. Is it bad to cosign on a loan?

(+) Yeah! (+)

I'm not talking about the dangers of the person defaulting. Thats low risk in this situation.

My gf has almost no credit history. Lived at home with her parents and the places she lived alone were all owned by family members so she never needed to pay anything other than paying family directly. She never needed a credit card or to apply for things. Cars were all handed down etc etc.

Now she wants a new car and all the family cars are old and shitty. Since she has no history the dealer recommended a cosigner and i dont mind doing it since shes good with money and we have been together for years.

My issue is that i want to buy a new car soon too and how will it show up for me as a cosigner to her car?

Depends on your credit score at the end of the day. Co-signing for a loan will affect that as they will do a hard check on it. If you do it right you would need to wait 6 months or more before you get a new car yourself. You dont want multiple checks within a short time frame.

ToadallyAwesome posted...

Depends on your credit score at the end of the day. Co-signing for a loan will affect that as they will do a hard check on it. If you do it right you would need to wait 6 months or more before you get a new car yourself. You dont want multiple checks within a short time frame.

The checks aren't as bad on a credit score as most people believe. It's a few points deducted tops.

TC, what you'll want to look at is your debt-to-income ratio. Anytime you apply for a secured loan like a car or house they will look at your income left over after debt. Co-signing on a car loan adds to your monthly debt payment. It can make it harder to qualify for another car loan if over 50% of your monthly payment goes to debt payments.

As long as you make decent money and the monthly payments for the car are on the lower end, you should be fine.

Yes, youre essentially accepting responsibility for that loan should they stop making payments for whatever reason. The only person I would even consider co-signing a loan for would be my child. I sure as hell wouldnt for a gf or a friend, youre just asking for a potential headache.

Zanzenburger posted...

The checks aren't as bad on a credit score as most people believe. It's a few points deducted tops.

The dealership I went to did 3 checks within 24 hours (shopped it out I guess and each financier checked it) and I dropped 110 points overnight.
That shit can sting.

Sure, if you're willing to make monthly payments on that loan even if you break up.

[LFAQs-redacted-quote]

It's been over a year, and all three show up individually.
I've just accepted that It's going to take a while to recover.

This sounds like a dumb reason to cosign on a loan.

Basically think of the worst case scenario (she leaves you and stops paying for the loan). How financially screwed would you be if that happens.