Question: The car dealer told my daughter the financing was arranged, gave her the car then five days later called her to tell her she needs a co-signer. What options does she have?

August 27, 2005

Dear Tony

My 21 year old daughter wanted to buy a car. I advised her not to go to a dealership, but she was eager to buy. The salesman was eager to sell to her. She called him, stated that her credit was not good, gave him all her information and he said that it was no problem, she could come and get the car and they could get her financing.

She went, signed a contract, everyone at this dealership told her, no problem. She would not need a co-signer and the car was hers. Well, five days later, they called and said she needed a co-signer, because they could not get financing for her.

She is 21, in college and a has a part-time job. They wanted her to pay 22% interest for a $10,000 car over five years. Of course, she went for it without my consent . . . she's 21! I told her no, but no use.

I just don't comprehend how these people in good conscious could sell her this car and tell her "yes, yes, yes . . . it is yours!" Then five days later they tell her "sorry, we could not help."

What are the options she has?

DG

Answer:

Hi DG,

Well, If she came up with a co-signer and the co-signer signed all the papers then the only option she has is to make the payments and hopefully, learn from this experience.

If however, she can't get a co-signer, or she got one and this person hasn't signed yet then she can just give the car back, because without financing there is no deal.

If she still wants the car she can try to arrange financing with a bank or credit union on her own, but if her credit is bad plus the fact that she just has a part time job chances are she won't get a loan.

Her best bet is to save up some money and buy an inexpensive car from a private owner for cash.

This is a great option, because there are no car payments and no possibility of repossession. The car is hers. If you search around you can usually find something pretty decent for $1,500 to $2,000.

All my very best...

Tony Iorio