Dear Penny: My Sister Moved in With Dad, Says She Can’t Be Evicted

Dear Penny,

I am a 30-year-old who has built a stable and happy life after growing up in a family that was often unstable emotionally and financially. I love them, but as I become more successful, my family needs more and more of my support. 

My sister and her son moved into my father’s one-bedroom apartment in July, which is against the lease. I was very against this living situation because it’s way too small for two adults and a rambunctious child. My sister said she had no other options because she has terrible credit, little savings and an eviction. She was laid off for not having child care and is collecting unemployment. My father was struggling to pay for his apartment, as well. 

Their relationship has deteriorated. I don’t think they can continue living together. My aunt  co-signed for my father’s apartment and says my father can stay in her spare bedroom if he works with her to fix his finances. My aunt has been trying to help me, as she knows I am overwhelmed mediating their arguments and finances.

I told my sister we will need to find another place for her to live after April, and that I would co-sign if she sat down with me to go over her finances. She cried and said it would be impossible to find a place being unemployed, and that no one cares about her ending up homeless. 

She said she will refuse to leave the apartment if management doesn’t let her take over the lease. She believes that since she is a single mother with a child, they won’t be able to evict her. I’ve explained there could be negative consequences on her tenant record and for my aunt since she’s the co-signer,  but my sister says everything will be fine. 

I don’t want to hold my sister’s past mistakes against her, and COVID-19 has disproportionately impacted single mothers. She has been better with her money the last three months, but she has been very irresponsible in the past. (Example: paying for breast implants.) She can’t stay with me because I’m a head of house in my alma mater’s dorm, which grants me and my partner a free apartment. 

How should I proceed with my sister? Am I being too supportive, or not supportive enough? I feel guilty even having my own financial goals when my family is struggling. 

Sister Struggles

Dear Sister,

When someone tells you they’re about to behave terribly, listen. I don’t care if your sister has been more responsible for three months. She obviously doesn’t plan to be responsible moving forward. She’s also made it clear that she’s up for a fight. Please don’t co-sign for her and let her take down your credit in the process.

This is a problem between your sister, your dad and your aunt. I certainly feel for your aunt. I get that you’re both trying to help each other work through this mess. But you’re both ascribing magical thinking to your fix-it powers for your dad’s and sister’s financial messes. Nothing in your letter suggests that either one is interested in help.

If I were your aunt, I’d talk to an attorney who specializes in tenant law ASAP. You can suggest she do so. You also need to tell your sister you’re no longer in a position to co-sign. She’s going to cry and scream about how you’re ruining her life. Tell her by phone so you can hang up if things get out of hand.

The beauty here is that your living situation legitimately gives you a reason your sister and nephew can’t move in. I’d urge you to hang onto this arrangement as long as you can so you can develop firm boundaries. It’s OK to use dorm rules as an excuse while you get comfortable making it clear that you’re done bailing out your family.

Your signature probably isn’t the only thing standing between your sister and homelessness. Maybe she’s eligible for public housing, or she has friends who will let her couch surf. I’m not going to waste any energy exploring these options, though, because this is not your problem.

But here’s the trade-off: You don’t get to have an opinion even if you’re “very against” whatever living situation your sister comes up with. The second you weigh in, you’re throwing your sister a lasso. Don’t allow her to drag you back in.

This may seem like a money problem, but deep down it isn’t. Yes, life would be easier if you could buy your dad and your sister separate homes on opposite sides of town. But I suspect they’d still leave you emotionally drained. Emotional vampires always do.

Your financial goals are completely unrelated to your family’s struggles. The sooner you can separate the two, the better off you’ll be. Please don’t feel guilty for using your money to make good decisions for yourself instead of enabling your family’s bad ones.

Robin Hartill is a certified financial planner and a senior editor at The Penny Hoarder. Send your tricky money questions to AskPenny@thepennyhoarder.com.

This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.

Source: thepennyhoarder.com

How Much Does a Cosigner Help with Getting Auto Loans or Better Loan Terms?

A woman in a bright yellow dress drives a silver car.

Imagine you’re shopping for a new car and finally find a reasonably priced set of wheels that you like. But when the dealer pulls your credit, that seemingly affordable monthly payment is no longer available to you. Instead, you’re offered a subprime car loan at 10% or even 20% interest because your credit isn’t strong enough to get a better rate.

How much does a cosigner help on auto loans when you’re facing this type of situation? Get more information below to help you decide whether seeking a cosigner is the right option for you.

How Does a Cosigner on a Loan Work?

A cosigner is basically someone who backs the loan. They sign agreeing that if you don’t make the payments as promised, they will step in to pay them.

If you don’t have much of a credit history or your credit is bad or poor, lenders are typically hesitant to give you an auto loan. They perceive you as risky. Will you pay as agreed? There’s not enough data or credit history for them to make that call.

However, a cosigner with a long history of good credit is different. The lender is more likely to believe that this person willpay as agreed. So, if you can get a cosigner to back you, you might have a better chance of getting a loan or getting better terms.

How Much Does a Cosigner Help With an Auto Loan?

How much can you save? Imagine you finance $37,851, the average price for a new light vehicle in the United States as of February 2020.

The average interest rate as of the end of 2019 for new car loans was 5.76%. If you’re able to get that interest rate and a loan term of 72 months—that’s 6 years—you would pay a total of $44,742. That’s $6,891 in interest and a monthly payment of around $621.

If you financed at 10% without a cosigner for the same terms, you’d pay a total of $50,488 for the vehicle. That’s $12,637 in interest and around $701 in monthly payments.

This is obviously just an example, but you can see that a cosigner can save you a lot. In this case, it’s $80 a month and more than $5,700 total.

Cosigner Versus Co-Applicant

It’s important to note that having a cosigner for a car loan is not the same thing as having a co-applicant. A co-applicant buys the vehicle with you. Their credit history and income are used alongside yours to determine if you, together, can afford the vehicle. The co-applicant also has an equal share of ownership in the vehicle purchased with the loan.

A cosigner, on the other hand, doesn’t have an ownership share in the vehicle. Their income may also not be a factor in the approval. Typically, they’re along only to provide a boost in the overall credit outlook.

What Are Some Downsides of Having a Cosigner?

Most of the risks or disadvantages are held by the cosigner. If you don’t pay the loan, they could become responsible for it. They could also suffer from a lower credit score if you’re late with car payments because it might get reported to their credit too.

As a borrower, you might experience a few disadvantages in using a cosigner. First, you have to get someone to agree to this, and you typically want it to be someone with good credit. Trusted family members are the most common cosigners, but that could mean that they might want to have a say in what type of vehicle you get.

And if something happens and you can’t pay the vehicle loan for any reason, you run a personal risk. You could damage your relationship with the cosigner if they do end up having to pay off the loan or face damage to their credit.

So, Should You Get a Cosigner for an Auto Loan?

The decision is personal. Before you do anything, check your credit and understand where you are financially. That helps you know what your chances for getting approved for a loan are on your own and how much loan you might be able to afford.

Then, check out some potential auto loans and consider whether you should apply for them on your own. If you know your credit is too poor or you try to apply for a loan and don’t get favorable terms, talk to a potential cosigner. Be honest about your situation and have a plan to pay the loan on time each month so they feel more confident supporting you as you make this purchase.

The post How Much Does a Cosigner Help with Getting Auto Loans or Better Loan Terms? appeared first on Credit.com.

Source: credit.com