The day has arrived when your child has grown up and is in need of a car. However, he/she does not have enough money or credit history to buy a car or get car financing. You are almost morally obligated to give your teenager a car. However, since you may think that if he wants to drive a car, he must have the potential to buy one. But chances are that he may not have the money to buy a car. The least you can do is to co-sign a car loan. You may have already assumed all the cons associated with this proposition but before dismissing the same completely, give it a second thought. There are several advantages that help young adults to get a car loan approval.
This is going to be advantageous for your kid but not so much for you. When you co-sign a car loan, you are offering a safety net to your kid in case he is unable to make the payment on his own. In case, your teen defaults, the bank will come to you for the money. When you pay this amount, you are actually saving your son and his credit history. Your kid could be on the verge of losing his first car. But due to your help, he will be able to retain it. This kind of situation is a great opportunity to teach kids about their financial responsibilities and the consequences they have to face if they fail.
Getting a safe car
Co-signing is a great way of insuring a teenager. It is well understood that if a teenager has to buy a car, he/she would not be able to buy anything that is worth more than $1000. This is because they would not have saved anything more than this sum and this amount could only buy them an old jeep without a cover or a malfunctioning Chevy. Teenagers would not even have the money to buy a certified used car with good repair packed with safety features. It is only you who can ensure their safety by helping them buy a car by co-signing the car lease.
Protects them against financial trouble
If your teenager cannot get a car loan approval through the right channel, he would end up giving his money to some shady dealer. The dealer would then sign him up for some kind of financing with high interest and outrageous terms.You do not want him to fall prey to such kind of people and end up having financial issues. He will end up coming to you if anything of this sort happens and then you would definitely have to spare money for him. So, before any of this could happen, you can save him from all kinds of monetary issues just by co-signing his car loan.
Disadvantages of co-signing a car loan
Everything comes with its own set of disadvantages. The same is applicable if you co-sign your teenager’s loan. To begin with, your child might default and you will have to pay the remainder money. If you are not able to pay, the same can affect your credit score. Secondly, since your child would be needing car financing, you would have to pay more money for your insurance since you must have full coverage in this situation. Thirdly, when your child is able to get car financing and you as the co-signer, he may want to go for a car much expensive than he would have gone for if he had to pay from his own pocket. You must make him understand the terms before you go for the deal.
If you want the best out of co-signing your teen’s car, get the best car features for teen drivers within the budget for safety purposes. You must also make your child go through the car loan approval process for better learning before approaching the dealer to get a better deal.