Question about being a lease cosigner.
12-10-19, 07:37 AM
#46
Lexus Fanatic
Yes and no. The way the U.S. credit-laws are written today, one's credit rating can suffer for what IMO are not credible reasons. A classic example (which happened to me) is merely getting a new credit card, making changes to or getting additional bank-accounts, or cashing in on an old account and starting a new one. I'm about as responsible and risk-free with finances as one can get (never been in debt a single dime.....I pay off all of my bills every month), yet my rating, from up around 800 step-by step, dropped some 100 points after I made banking changes, seemingly for no reason at all. Since then, fortunately, it has risen back up again almost as sharply. Not that, in my case, it really makes any difference, since I don't actually finance anything. But I only brought it up to illustrate what I think is one thing in the law that needs changing. Credit ratings should not drop just because you made some banking changes...particularly if those changes don't affect your ability to pay bills.
Now, in the case of Och's friend, if his friend was telling the truth, he actually can't continue the payments, having lost his job. But anyone can lose their job, even with a perfect 850 credit rating, and, in my case, I'm retired with lifetime pensions and tax-free investments that are not likely to be lost.
Last edited by mmarshall; 12-10-19 at 07:42 AM.
12-10-19, 07:50 AM
#47
Lexus Fanatic
I see cosigners on a regular basis, on mortgages, etc. For a lot of young people its what they need to get started, for many people with hard to document income (self employed, etc) even with money they need what we call a non-occupant co-borrower (fancy way of saying "cosigner"). I have a client with a net worth of over $6M who needed a non-occupant co-borrower because she didnt have enough earned income to qualify for a refinance mortgage smaller than the one she already had lol
If you as a policy don't want to cosign on anything then thats fine, I understand that. Many people have cosigners on loans though due to specific circumstances and do not default, for many families these are the sorts of things we do to help each other out when we need it. My wife's father cosigned on her first car loan.
As for credit scores, changing bank accounts doesnt impact your credit score. Your bank accounts dont even show up on your credit report. Some banks will do an inquiry when you sign up for a new bank account which may hurt it briefly. Closing old credit card accounts has a HUGE impact and you should basically try never to do that.
12-10-19, 07:54 AM
#48
Now, in the case of Och's friend, if his friend was telling the truth, he actually can't continue the payments, having lost his job. But anyone can lose their job, even with a perfect 850 credit rating, and, in my case, I'm retired with lifetime pensions and tax-free investments that are not likely to be lost.
12-10-19, 07:57 AM
#49
Lexus Fanatic
And he may have had no score, or even a high score with no prior car lending history or mortgage history, which most lenders require for a car lease. Its harder to get approved for a car lease than it is a car loan.
Anybody can loose their job sure. If I had a friend cosign on a loan for me and I lost my job, I would make sure that I did everything I could possibly do to avoid sticking them with the cost of the vehicle or damage their credit. It sounds like Och's friend just told him "good luck" which isn't right.
12-10-19, 08:07 AM
#51
Lexus Fanatic
12-10-19, 08:17 AM
#52
Lexus Fanatic
12-10-19, 08:17 AM
#53
Lexus Fanatic
12-10-19, 08:49 AM
#54
That's true. If you're someone who doesn't use credit as you have no need to it can come as quite a shock when lenders turn you down as you have no history for them to review.
12-10-19, 09:13 AM
#55
Lexus Fanatic
12-10-19, 10:06 AM
#56
Racer
[QUOTE=SW17LS;10678121]Well, that would be why lenders require a cosigner.
I see cosigners on a regular basis, on mortgages, etc. For a lot of young people its what they need to get started, for many people with hard to document income (self employed, etc) even with money they need what we call a non-occupant co-borrower (fancy way of saying "cosigner"). I have a client with a net worth of over $6M who needed a non-occupant co-borrower because she didnt have enough earned income to qualify for a refinance mortgage smaller than the one she already had lol
If you as a policy don't want to cosign on anything then thats fine, I understand that. Many people have cosigners on loans though due to specific circumstances and do not default, for many families these are the sorts of things we do to help each other out when we need it. My wife's father cosigned on her first car loan.
As for credit scores, changing bank accounts doesnt impact your credit score. Your bank accounts dont even show up on your credit report. Some banks will do an inquiry when you sign up for a new bank account which may hurt it briefly. Closing old credit card accounts has a HUGE impact and you should basically try never to do that.[/QUOTE]
I cycle through credit offers to maximize points and such. Wife and I both have over 800 scores, hers being slightly higher than mine. We don't plan to finance anything else huge in a while so we're not too concerned by temporary dips in our rating after closing accounts as it always rebounds within a month or two. What I learned is you can transfer your credit line from one credit card to another before you close it. This only works when both cards are issued by the same bank but it reduces the impact to your credit score because the credit bureaus do not see a reduction to your total available credit line. This tip was shared by the credit card representative when I closed a card.
That is a tough situation for the OP and I hope it all works out soon for both OP and friend. I know it is a little late to ask, but was there ever an option for the friend to sign up for deferment or loan insurance that protects against job loss? I know banks advertise that on credit cards. If I was the borrowing friend, I wouldn't be able to face the OP but would still try to do everything I could to ensure my personal situation didn't affect my trusted co-signer friend in any negative way. We had our ups and downs with our business but we always refused loan offers from friends and my parents because we would rather lose the business than take our friend, or my parents, down with the ship. On the other hand, I am more than willing to help out family.
I cosigned for my Aunt and Uncle on their home. They would not intentionally put me in a bind, but if the unimaginable happened then I am sure the rest of the family and relatives would pull together to help out my Aunt and Uncle (and by extension, me too).
I see cosigners on a regular basis, on mortgages, etc. For a lot of young people its what they need to get started, for many people with hard to document income (self employed, etc) even with money they need what we call a non-occupant co-borrower (fancy way of saying "cosigner"). I have a client with a net worth of over $6M who needed a non-occupant co-borrower because she didnt have enough earned income to qualify for a refinance mortgage smaller than the one she already had lol
If you as a policy don't want to cosign on anything then thats fine, I understand that. Many people have cosigners on loans though due to specific circumstances and do not default, for many families these are the sorts of things we do to help each other out when we need it. My wife's father cosigned on her first car loan.
As for credit scores, changing bank accounts doesnt impact your credit score. Your bank accounts dont even show up on your credit report. Some banks will do an inquiry when you sign up for a new bank account which may hurt it briefly. Closing old credit card accounts has a HUGE impact and you should basically try never to do that.[/QUOTE]
I cycle through credit offers to maximize points and such. Wife and I both have over 800 scores, hers being slightly higher than mine. We don't plan to finance anything else huge in a while so we're not too concerned by temporary dips in our rating after closing accounts as it always rebounds within a month or two. What I learned is you can transfer your credit line from one credit card to another before you close it. This only works when both cards are issued by the same bank but it reduces the impact to your credit score because the credit bureaus do not see a reduction to your total available credit line. This tip was shared by the credit card representative when I closed a card.
That is a tough situation for the OP and I hope it all works out soon for both OP and friend. I know it is a little late to ask, but was there ever an option for the friend to sign up for deferment or loan insurance that protects against job loss? I know banks advertise that on credit cards. If I was the borrowing friend, I wouldn't be able to face the OP but would still try to do everything I could to ensure my personal situation didn't affect my trusted co-signer friend in any negative way. We had our ups and downs with our business but we always refused loan offers from friends and my parents because we would rather lose the business than take our friend, or my parents, down with the ship. On the other hand, I am more than willing to help out family.
I cosigned for my Aunt and Uncle on their home. They would not intentionally put me in a bind, but if the unimaginable happened then I am sure the rest of the family and relatives would pull together to help out my Aunt and Uncle (and by extension, me too).
12-10-19, 10:08 AM
#57
Lexus Test Driver
Speaking to the general topic of leasing a BMW as a first car, I think it's probably a better course of action to establish your credit history first. Even if you buy a basic Camry/Fusion/etc first and establish a history of paying a loan, then later on upgrade to the BMW. In the case of Och's friend, this would have probably allowed him to save more money on the side for emergencies like unemployment.
My first non-beater car was a 2012 Ford Fusion that I bought used right out of college. My credit history consisted of one year of a credit card via my bank. This allowed me to get a good rate on my loan without a cosigner. Paying that loan for a few years put me in a great position, combined with the fact that I now make a lot more than I was at the time, I'm in a good place to buy nice cars should I so desire. It only took a few years of working in a professional field. I think so many people in my generation lack self-control and want that instant gratification. We hired a kid who immediately went out and bought a new Audi. He didn't last a year at our office before he found himself unemployed due to his utter incompetence and awful work ethic.
12-10-19, 10:11 AM
#58
Lexus Fanatic
It is highly improbable that this friend of the OP has a 800* score with an insufficient history, it is very likely the person has a poor credit score which is what I had meant.
Last edited by Toys4RJill; 12-10-19 at 11:01 AM.
12-10-19, 10:12 AM
#59
Racer
Couldn't the friend at least become an Uber/Amazon driver and make enough from that to cover the cost of the lease payments and insurance, while still having time to look for new work?
12-10-19, 11:47 AM
#60
Lexus Fanatic
I cycle through credit offers to maximize points and such. Wife and I both have over 800 scores, hers being slightly higher than mine. We don't plan to finance anything else huge in a while so we're not too concerned by temporary dips in our rating after closing accounts as it always rebounds within a month or two. What I learned is you can transfer your credit line from one credit card to another before you close it. This only works when both cards are issued by the same bank but it reduces the impact to your credit score because the credit bureaus do not see a reduction to your total available credit line. This tip was shared by the credit card representative when I closed a card.
No doubt.
Of course. Something similar happened to myself decades ago in my late 20s, my sister and most recently my mother at the age of 75. Some just have no need for a loan or credit. I don’t think someone could have a credit score of 800 with an insufficient history, perhaps yes or not, not really of importance to me. Bad credit is often reflected with a poor credit score.
It is highly improbable that this friend of the OP has a 800* score with an insufficient history, it is very likely the person has a poor credit score which is what I had meant.
It is highly improbable that this friend of the OP has a 800* score with an insufficient history, it is very likely the person has a poor credit score which is what I had meant.
For a car lease, typically they wont approve a car lease if you dont have a prior car loan on your report or a mortgage. So if you have credit cards and excellent credit but have never financed a car before and don't own a home, you might not get approved for a car lease on your own.
Thats not an issue for a mortgage or a car loan.