Nov
22
Would it be cheap to take a loan under my name (no credit) with a co-signer (good credit)? Or?
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Or would it be cheaper to have the co-signer with good credit take the loan under her name for the first year and have me co-sign?
Would it build my credit if I was a co-signer?
Would it build it more if the loan was under my name directly?
If it still builds credit for me to have the loan under her name with me as a co-signer so we can switch loan titles in a year or two, would that be a wise decision?
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2 Comments
June 13th, 2009 at 3:46 pm
I am guessing you are trying to buy a car. With a cosigner lending institutions look at the parties combined credit. If you are the one with little or bad credit getting someone with strong credit to cosign for you lowers the risk in the lender’s yes. The benefit to you is that you get approved, or a lower interest rate than you would have qualified for on your own. The reverse is true for the co-signer. The interest rate will be higher than what they would have qualified for on their own.
As far as who goes first or second on the loan it really does not matter. Both parties are responsible for the loan. Your credit is going to go up or down the same regardless of whether you are first or second.
It is difficult to change names on the title when you still owe money. You would probably have to refinance whatever you are buying and have your cosigner go with you to sign over their half of the purchase. When you refinance it the terms of the loan would depend entirely on your credit.
Try and get the loan on your own first. It is hard to find a good cosigner willing to help you that the bank will accept. Besides, your cosigner becomes half owner of the purchase. So if you get a siginifcant other to cosign and you split up down the road they can cause problems for you when you want to sell the car.
If you have no credit a good way to build it is to get a secured credit card. Basically, you have to deposit an amount of cash into a savings account. That amount becomes your high credit limit on the card. It is easy to get approved because the cash in your savings account is the collateral. Some people think of it as borrowing their own money. Wells Fargo, Orchard, and Bank of America offer cards like these to name a few.
June 16th, 2009 at 9:02 am
1) It would probably provide better rate and terms using the better credit
2) You would not be a co signer….the person with good credit is the co-signer
3) It would build your credit if you had a co-signer. Both credit reports would show the activity.
4) It would not report differently whether you had the loan alone or with a co-signer.
As for switching titles. This wold require closing the loan completely and getting a new loan. Lenders will not allow a borrower who signed to remove himself from liability without closing the loan completely.
Here is some additional info. Hope this helps.