Alright guys, I have a good question here. My mom makes decent money, BUT her credit sucks, during her last marriage the guy screwed up her credit big time, so she can't get a new car. Her current car is old and its time to retire. She want me to buy the car for her (I have good credit) and then she will make the payment (i'm already doing this very thing for my sister), I know she will and I trust her to do that, BUT here is the catch. I'm planning on buying some investment property in September and I want my credit to be free when I do so. I don't want the fact that I have another car on my file make my debt to income ratio become so unfavorable that I don't get approved for my investment property. What do you guys think I should do?
I love my whole family, but would never sign for someone who I knew was unworthy of bad credit, especially, at the expense of my own. And yes, an additional fixed credit loan can affect your monthly debt to income ration, which is something mortgage companies pay particular attention to.
I'm not entirely convinced your mom can't get a loan on her own. Have you checked with credit unions? Limit the complexity first by trying to get her financed. Exhaust that COMPLETELY before you sign loans for people.
Have her go to a bank buy a CD with the same term and amount of the loan and have her borrow against that..
yeah i'm trying that now. Looks like she can, BUT the interest rate they are trying to charge her is like 14% which is way too high.
Two options: One: Put the money into a bank as collateral for her loan. Yeah the interest rate is still going to be high, BUT she is at least building her credit up again. If you finance it and she makes every payment on time, it does nothing for her. This is probably your best bet because you dont want it on your credit at all. Two: Take the money that was going to the bank as collateral and buy her a car. Have her pay you back. Its an interest free loan to her, unless you want to start running the juice on moms. I wouldnt do this only because doing stuff like this with friends or family is always a horrible idea. Never mix personal with business. It ALWAYS gets ugly. ALWAYS!!!!!
I'm a little confused. I feel like people are assuming that reggietodd has a pot of money that he can use to help his mom, as opposed to using his credit to lease a car for her. Can reggietodd still do some of these collateral ideas if he doesn't have the money in hand?
I can't. The car she wants is about 16K (pontiac vibe). I think its a terrible car, buy hey thats what she wants. I do not have that kind of cash just laying around. All I have is my good credit to work with here.
Man you are about to get yourself into a mess of trouble if you go through with this ~ also tell to lower her standards a bit (think Kia Rio).
Agreed...It's good your doing this for your family, but to be honest with you, I'm not sure if I would...I mean, I love my family, but love can't make car payments or fix your credit...Get a nice used car, but with the bad credit, expect the interest rates to be above 10%...
Suze Orman would be mad if you take out a loan for your mother. A TON of the people that call her show are in bad credit trouble because they were doing a favor for their relative. Not everybody deserves everything they want...if she can't afford a new car or have good enough credit for one, she should get something cheaper. Pay cash for a decent used car...something reliable that will get her from A to B.
Thanks guys, i'm going to wait. Keep in mind i'm already in this same situation with my sister, and its been almost 2 years now and she has made every payment so it has worked out well. The deal with her was that she was in school forever (doctorate) and by the time she got out of graduate school, she really didn't have any credit at all, but was making great money. I'm going to tell my mom to wait and make her get a credit card and start working on her credit, then maybe in a few months i'll help her apply again and maybe she can get a better rate.
So let me try to understand this: There isn't one single place in this huge city that would sell her a car without your JH? Pontiac Vibe? ugh. Buy her a moped for that remark. I'm sure your family's favorite co-signer will make the right decision.
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