- advertisement -

Be honest with your co-signer

Dorothy Rosen -- The Dollar DivaDear Dr. Don,
I am applying for a car loan and my parents are co-signing for me. I have $1,500 outstanding with a credit collection agency. Will my parents be told this when they co-sign for me? -- Angela

- advertisement -

Dear Angela,
Shame on you for not telling your parents about the $1,500 debt when you asked them to co-sign the car loan application for you. Don't try to hide this debt from them; they deserve to know what they're getting into by helping you out.

Co-signing a loan is a very serious business; as co-signers, your parents assume as much responsibility for the car loan as you do.

If you don't make the payments, the black mark goes on your credit report and on their credit reports as well, and the three of you get to live with the consequences for seven long years.

Your credit report is already a mess; take the high road and let your parents decide if they want to risk co-signing a loan for someone with your debt history. The Diva would advise against it, but parents are saints when it comes to giving kids a second chance.

If your parents do co-sign for you, tell them that you understand the responsibility they are assuming and express your appreciation for their vote of confidence. Show your gratitude by making the car payments in a timely manner and promise them that you will tell them in advance if you cannot make a payment on time. This will give them the opportunity to do what needs to be done to protect their credit rating.

DOROTHY ROSEN has a master's degree in finance, with a specialization in accounting, from the Kellogg Graduate School at Northwestern University in Evanston, Ill. Rosen has more than 15 years of experience in the financial arena, serving in Illinois and Florida as a certified public accountant, financial consultant, expert witness and educator. She is owner of Dorothy Rosen, CPA, a public accounting firm that serves individuals and small businesses.

 
-- Posted: Aug. 13, 2001
   

 

 
 

 

Looking for more stories like this? We'll send them directly to you!
Bankrate.com's corrections policy
Print  
 

30 yr fixed mtg 3.98%
48 month new car loan 3.22%
1 yr CD 0.71%
Alerts


Mortgage calculator
See your FICO Score Range -- Free
How much money can you save in your 401(k) plan?
Which is better -- a rebate or special dealer financing?
VIEW MORE CALCULATORS

BASICS SERIES
Begin with personal finance fundamentals:
Auto Loans
Checking
Credit Cards
Debt Consolidation
Insurance
Investing
Home Equity
Mortgages
Student Loans
Taxes
Retirement

MORE ON BANKRATE
Ask the experts  
Frugal $ense contest  
Quizzes  
Form Letters


- advertisement -
 
- advertisement -