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When not to co-sign a car loan

Tara Baukus MelloQuestionDear Driving for Dollars,
I was asked to co-sign on a car loan, but I'm not able to verify that person's Social Security number. The number I was given does not come up under the person's name. What should I do?
-- Loraine

AnswerDear Loraine,
It sounds like you don't know this person very well if you are trying to verify his or her personal information. In general, you shouldn't co-sign a car loan unless it is for someone you know very well, such as an immediate family member or longtime friend, and whom you feel confident will make the payments on time.

Co-signing a loan makes both parties fully responsible for the loan, including any outstanding payments. And it will impact your credit score. Depending on how the car is titled, you may not even have ownership rights to the car. If the person defaults on the car loan, you will be obligated to pay for it.

If you've been asked to co-sign a car loan for someone you don't know well, say no. You may also want to consider reporting the scenario to the authorities, as the person who approached you may be taking part in a scam.

Ask the adviser

If you have a car question, e-mail it to us at Driving for Dollars. Read more Driving for Dollars columns and Bankrate auto stories.
 

Bankrate's content, including the guidance of its advice-and-expert columns and this website, is intended only to assist you with financial decisions. The content is broad in scope and does not consider your personal financial situation. Bankrate recommends that you seek the advice of advisers who are fully aware of your individual circumstances before making any final decisions or implementing any financial strategy. Please remember that your use of this Web site is governed by Bankrate's Terms of Use.

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