Is Cosigning A Car Loan Really So Bad?

Image by roger4336 via FlickrWe all know that cosigning a loan is just asking for trouble. Your taking a big risk that the person you are cosigning for will leave you holding the bag. When the bank doesn't approve an individual for a loan the bank is saying plainly that they believe the person is not financially or personally able to pay it back. Why can't people who are tempted to cosign a loan, for a freind or relative, be as calculating as that?

I have written before about my daughters car problems and need for replacing her car. The car has 210,000 miles on it and it's time. Yet the car continues to live on and won't die. She and her boyfriend have purchased a 2006 Chevy Cobalt. It's in great shape and has low mileage. It was a really great choice.

Then why am I bringing all this up? Well, they have bad credit, when they financed it they got a very high interest rate. It's 18% interest. The payments are high and a lot of money is going to interest. I want to help.

I feel if I refinance the car as a cosigner I could get their rate down to 5%. It would be a big help in getting the payment way down. But then that would go against the no cosigning rule.

If I did do it, would there be a chance they wouldn't pay it. Yes, there always is a they could lose their income and be unable to pay and also by their track record not pay their debts. I would then be on the hook for the note. Is it worth it to take the chance? Would it destroy the relationship?

What are the odds they would default. According to the FTC, depending on the type of the loan, as many as three out of four primary borrowers default on their obligations, leaving the cosigner to pay. This is, after all, why they need a cosigner: they're not good credit risks, either because they have too much debt already, or because they don't pay their bills on time.

This is their first real excursion into the world of credit for almost 10 years. They are learning first hand the result of messing up your credit. Sure the downside of bad credit is having the worst possible interest rates when borrowing money. But this is a great lesson and it will leave a bad taste in the mouth for many years to come. It's something they will never forget and hopefully never repeat. My intervention may circumvent this life lesson and postpone learning a hard truth.

You're not really helping someone if you assist them to take on a large car loan when they have had historical trouble paying their bills, or to refinance their debt without attacking the spending that brought on the debt in the first place. "Helping" people to avoid dealing with their problems isn't much help at all. It feels terrible to say no, and the person will probably be hurt when you do. It may sour the relationship. But keep in mind that however bad it feels, and however much the relationship suffers, this is nothing compared to the bad feelings and relationship problems that you will encounter if you become their chief creditor.

Five Reasons A Mortgage May Be Declined By A Lender

Preparing and filing all of the required paperwork in an effort to get a mortgage for your family’s new home is an enormous task, only to wait for some banker to call you to inform that the financial institution has decided to turn you down. It might seem flat out unfair and difficult to understand why you’ve been denied. As time has passed by, financial institutions seem to have become increasingly strict on who they are willing to lend their money to. Because of this, consumers need to be prepared. You need to understand how the lending process works and how you can best put yourself in a position to be approved for your mortgage. Here are five tips how.

1) Too much credit already used

It’s important to understand how financial institutions view existing consumer debt when considering a mortgage. A general rule of thumb is that an individual’s housing costs should account for no more than 33% of their gross income. Consumer debt should account for no more than 5% on top of that. When an individual’s consumer debt exceeds the 5% figure, it cuts into the 33% that is allowed on housing costs. For example, if your consumer debt accounts for 9% of your gross income, a financial institution may only approve a mortgage that account for no more than 29% of your gross income. So what does this all mean? Keep your credit cards under control to keep that consumer debt down.

2) Change of Employment

Changing jobs can increase the difficulty in getting your mortgage approved. The reason for this is that financial institutions are looking for consistency in your earnings. Specifically, they would like to see 2+ years of financial consistency. There are exceptions to this, however, such as individuals who are moving to higher paying positions in the same or a very similar field. Perhaps the most fatal job change mistake people can make during the mortgage process is transitioning from a salaried position to self employment as they now have zero financial consistency to offer on the loan application. Not surprisingly, the self-employed and those who work sales based jobs that rely heavily on commission are those who find it the most difficult to get accepted for a mortgage.

3) Your credit score is fluctuating

Because of the length of time is can take while shopping the housing market, it may be a matter of several months between filling out your credit application and finalizing the loan. Because of this it’s natural to expect that the financial institution may perform several checks on your credit. You want to be sure nothing happens that might cause it to go down during the process, causing you stress and complications. Make sure all of your payments are made on time during the application time period and also avoid opening any further lines of credit. For good measure, also be sure to request your credit report from all of the refutable agencies and check for any inaccuracies before beginning the mortgage process.

4) Mortgage payments are missed

To piggy back off of reason 3 a bit, it is extremely crucial that you do not miss any of your significant payments while applying for your new mortgage. The last thing you want to do is make the financial institutions start viewing you as a credit risk. If you have a current mortgage it is imperative that you pay it on time. If you are having issues paying your current mortgage you should discuss options with the mortgage holder to have it amended.

5) Missing the obvious

Lastly, be sure not to miss the obvious. When going through the application process be sure you read every form intently and understand what you are filling out. Make sure all of your information is accurate and complete. Double check and then triple check your work. This is an extremely important process so you will need to pay extra attention to detail.

Bio

This author of this guest post is Andrew Potter who is the director of My Online Estate Agent. My Online Estate Agent is a UK based low cost estate agent which allows sellers to advertise on Rightmove, Zoopla, Primelocation and Find a Property.

The Best Student Credit Cards Reviewed & Tips For Using Them Right

A students first credit card is not something to be taken lightly by a student or their parents. Students need to realize that credit cards are a form of money and you should not spend money you don't have. 

There is a place for credit cards in peoples lives but being responsible with them is the most important thing. The number one rule when being responsibly with credit cards is only spending what you have the ability to pay back, every month. 

Rule number two is never carry a balance. If you don't know if you can do that, then stay away from credit cards, your headed for trouble.

Here are a few credit card tips:

• Simply, don't use a credit card if you don't have the cash to pay it off when the bill is due. If your at the gas station and spend $20, when the bill comes in and you only make the the minimum payment, that $20 for gas can turn into $60 in the long run. DUMB. If you must use a credit card pay it off the same month and bank the rewards. 
• Never carry a balance. Your a student with little or no income. You have to be very careful with money. That balance will grow and grow over time. That $100 balance will work its way up to $1,000's before you know it. 
• Remember you have a credit limit. If you go over your limit you will be charged a large fee. Also remember your ability to pay off your monthly bill is in direct relation to your monthly income. 
• Annual fees are a no-no. It's very import to not pay a annual fee. It's also not necessary. There are many credit cards that have no annual fee. Stay away from them. 
• Avoid extra fees. Making a late payment or going over your credit limit will earn you a nice penalty fee. These are unnecessary costs you have to pay. It may be a sign your not ready for the responsibilities of credit cards. 
• Get the best deal on credit card offers. Today there are many companies offering credit cards. Shop around and compare their rates and reward points.

Some Student Credit Cards Available

The best of the bunch is the Discover Student card. It has some good cash back rewards and has no annual fee. The rewards are up to 5% in categories that change like travel, department stores, gas, restaurants, groceries, and more. There is a o% APR for the first 9 months. Also a 1% unlimited cashback bonus on everything else.

Another good choice in credit cards is the Citi Forward Card for College Students it offers all the cashback enticements of the mtvU card (5% at restaurants, movies, books) and 1% on everything else. You earn ThankYou Points with every purchase. Also you can earn an extra 10 points per month for staying under your credit limit and paying on time.

Are You Planning For Your Retirement Or Are You A Retirement Ostrich?

Image by Ginger Me via FlickrIn an age of faltering retirement plans and a Social Security system that is becoming insolvent, American are waking up to a new paradigm. In the old days, your savings, Social Security, and a part time job was all you needed. Today, some Americans don't give their retirement a lot of thought. They are dependent on Social Security and don't worry. They don't pay attention to their retirement because they think Social Security will always be there to take care of them.

When you feel someone is going to take care of you, you lose the ability or need to take care of yourself. A survey sponsored by ING, reveals that 55% of Americans do not know how to achieve their retirement goal.

Americans are realizing the fact that they are responsible and accountable for providing for their retirement. The stakes are higher today, retirees are facing a perfect storm of a faltering retirement systems, rising prices, a world recession, and global instability. We can no longer bury are heads in the sand any more.

According to a survey by HSBC, there are four categories of financial preparedness:

• Disengaged non-planners (35 per cent of the population) who are doing nothing, with the primary reason being a belief that they lack the necessary income.
• Advice-seeking non-planners (25 per cent) do not have a plan but do take occasional financial advice.
• Self-guided planners (13 per cent) have a plan in place but do not seek professional advice. Tend to be younger, mid to high income and internet savvy.
• Advice-seeking planners (26 per cent) have a plan and take professional advice to help manage their finances.

The worse off and most in need of help is the "Disengaged non-planners". They definitely believe they lack the money to prepare for retirement. They live paycheck to paycheck and are on a collision course with their retirement years. For them most of their working life is concerned for the present day. By choice or lack of money they will never attain a comfortable retirement.

The "Advice-seeking non-planners" are a lot better off. They are doing something for their retirement and do take financial advice. They have retirement accounts, though smaller than needed, it is still a good start. This group is able to improve their situation and address their future needs.

The "Self-guided planners" have a plan but do things on their own without professional advice. They are more aware of their future retirement needs and are taking action. They do their own investment planning and educate themselves to the financial world.

The "Advice-seeking planners" have a plan and seek professional help to help implement it. This group is the best of the 4 groups because they have the money, knowledge, and professional help to succeed.

If you are one of those that know they need to plan and save for retirement, yet are not turning this knowledge into action, you are part of the "Ostrich Generation". People need to look around and take stock of what they need to do; they can no longer rely on the state or their employers to provide for them. It's all part of taking resposibility for yourself.

The ING survey also reveals that 48% of non-planners associate retirement with financial hardship. While 23% of planners say this is a concern. Peace of mind is a side effect of proper retirement planning