Should You Cosign on a Clearwater FL Auto Loan?

Jul 2, 2013

When you are in the market for a new or used Clearwater Audi, dealership financing is a wise choice when you are considering your option. But if you are asked to cosign on an auto loan for someone besides your spouse, you may want to consider the consequences of what this commitment could have.

Auto loans are a big decision and one that should not be taken lightly even if the loan is for you. Auto loans can have a big impact on your finances and your credit. If someone asks you to cosign a loan because they cannot secure a loan on their own, you should think about what could happen.

If you cosign on an auto loan for a friend or a relative and they do not make their required monthly loan payment, you may be held responsible for making that payment or for the full balance on the loan. By someone else defaulting on their auto loan, you are accepting responsibility for the loan. This means you are obligated to make all future loan payments whether or not you have access to the vehicle being financed.

Making financial commitments with friends and relatives can be a dicey proposition so you should not take it lightly. Mixing money with relationships can create complicated situations. If someone you know approaches you about cosigning an auto loan, even your own child, think about the responsibility that loan obligation may carry with it should they default on the loan. You may consider seeing an attorney for further consultation if you do decide to cosign the loan. This may help protect you in the case of default.

If you assume responsibility for a Clearwater FL auto loan, you will need to make the monthly payments. If you default on your obligation, you are putting your own financial life at risk. Your credit score will suffer for many years to come as a loan default will be a red flag to future lenders. Credit scores are also instrumental in determining your insurance rates for vehicle coverage so it is always in your best interest to ensure your credit is in good standing so you can save money on premiums.

Helping a friend or loved one get the vehicle loan they are looking for may be a noble gesture but it is one that should be thought through carefully before any transaction is completed.