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Home / Buying / Can You Finance a Car for Someone Else?

 

Yes, you can finance a car for someone else. While the other person may have agreed to repay the loan if you do so, you are ultimately the one that is responsible for the loan, and your credit report will be the only one that suffers if the other person does not make the payments.

Option 1:  Co-signing

The most common way that you can help someone else obtain a car loan is to co-sign the loan. This means that both you and the other party are responsible for the loan. If the payments are made on time and the loan is paid in full, both credit reports will benefit. If payments are made late or the vehicle is repossessed, both parties suffer. Typically, in case of late payments, the lender will typically come after the co-signer first, simply because they know they are more likely to receive payment from this person than from the primary borrower.

Option 2:  Vehicle Financed in Your Name

Occasionally, a person’s credit may be so bad that they can not even obtain a car loan with a co-signer. You may be tempted to help if it is family or a close friend, but it is not a wise decision. If you obtain the loan for them, financing the car in your name, and they do not pay, you will be on the hook for all of those payments. Then there is the issue of recovering the property that you are paying for. Do you really want to be in the position of repossessing a car from someone? Potentially a family member or close friend?

There are many auto financing options available to people with bad credit today. There are very few people who cannot get a car loan if they have sufficient income to repay it, which should lead you to one final question before you consider financing a car for someone…why are all of the auto lenders out there denying them?

 

About the author: Jerry Coffey

 

Jerry Coffey is the financial expert here at AutoFoundry.com. A recovered "debtaholic," he now preaches frugal-living and sound money management here and at Repaid.org, where he is the chief contributor. He works for a major automaker.

 

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