personal loan to help family member get car? HELP?

L

Leslie

New member
I want to help my mom get a loan for a car its like $8500... my husband and I have that in savings and have great credit them not so much.. Im not at all concerned of repayment of loan I know they will.. but was thinking of getting personal loan so they wont have to get full coverage on it...anyways what to do.. take loan in my name have them pay it... so can still earn money on savings....banker said we can put in cd then loan thru it or something like that...suggestions please
update she tell me now she probably will get full coverage on it, they were approved for loan on there own.. but thought we could get a bettere interest rate, but the first car they looked at only booked for like 6600 so they only wanted to loan 6k and have them pay the rest down... but now new car is few years newer hopefully they can get it all in their names..and it will book for more even though its a lil cheaper
 
Are you in a position that if you lost the entire $8,500, you would still be okay financially? If yes, then go ahead. This would likely happen if they are in a collision and don't carry full insurance. If I owned a car worth that much, I'd definitely have full insurance. Is there a possibility of finding a cheaper car? You can find some really nice cars for under $5,000 if you search and haggle.

Mathematically and financially, it makes absolutely no sense to borrow money at 8% interest when you are only earning 2% on savings/CD. You lose 6% guaranteed. If that $8,500 is all or most of your savings, then you might not want to wipe it out, though. Maybe putting $3,000 down (or whatever you are comfortable with) and taking out a smaller loan might be a better option in this case.

If it is time for you to get a new car, maybe you could give them your old car or sell it to them for what the dealer offers you as a trade-in.
 
I have seen this go bad too many times.

Can you help her out by putting $1000 down and cosigning for her, then have her pay you the $1000 back over the course of a year?

$1000 without interest over a year is only $85 a month.

You are right - if you take the money out of your savings, you'll lose the potential interest. But if they finance it, they'll pay for full coverage insurance. I'd opt to keep the interest coming. Full coverage is tough financially, but it sure is good when you need it.

Good luck, thats a tough decision.
 
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