Is it possible to lease a car in a friend's name who has low or poor credit history and lives in a different state than where I live utilizing my own good credit record?
How does it work and what are the things to look out for?
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21This isn't the question you asked, but don't do this.– MrChristerMay 8, 2011 at 3:25
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7So - you want to lease a car for a friend using your good credit so that it is cheaper for the friend? This sounds VERY risky and will probably lead to you paying the lease off and your friendship destroyed when your friend can't or won't pay. Don't do it.– harmanjdMay 8, 2011 at 3:50
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Xubin - As others have mentioned, you can do this, and you're a nice guy for thinking of doing it, but why burn your cash and lose your friend?– gef05May 9, 2011 at 14:22
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12You're better off just giving them a couple of thousand dollars to buy a cheap car outright. Then you'll have no unrealistic expectations. If you can't afford that, or don't like the friend quite that much, you shouldn't be signing for a lease either.– poolieMay 9, 2011 at 17:22
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This is bit risky. You are going to put your goodwill at risk while helping a friend who had bad or poor credit history. This will effect your financial reputation, so think twice before executing this plan.– liza lizaAug 26, 2014 at 11:00
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5 Answers
It works as follows:
1) You go along to the place where he will lease, you sign the paperwork, and they run a credit report on you. Your friend gets his car.
2) 6 months later you get a letter asking for payment as your friend has missed the last two. The same behaviors that gave him bad credit are showing themselves now.
3) You no longer get return calls from the friend and realize you are on the hook for the money.
4) you are out one friend + one sum of money.
Note: the cases where this works out are rare. The correct answer to such friends is "OMG, I was just looking to trade my wheels in and was thinking of asking for your help. I guess we are in the same boat. How 'bout that (sport team) we both follow?"
answered May 8, 2011 at 17:10
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1this is assuming that said friend has a bad credit score for reasons that actually matter (missed or late payments, default, etc.) and not because they are simply too young or new to this country to have established credit.– crasicJun 4, 2011 at 17:53
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3@crasic Actually, it's not quite as different as you think. Banks react to "no credit" the same as "bad credit" for very intentional reasons.– NicoleSep 15, 2011 at 19:59
I am going to contradict everyone here and say that it does not always end in problems. Anecdotal evidence: a friend of a friend had zero credit (just came to the country) and asked me to co-sign on a vehicle, after no one in his family would help. After thinking about it, I decided to help him out. It turned out better than expected. He, in fact, paid it all off in two years (it was a 5 year lease, iirc).
The only negative was that as a thank you, he took me to see a movie on his dime. It was the first Star Wars prequel. That was pretty horrible, almost made me wish I never co-signed for him in the first place.
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8Black Swan exceptions don't disprove otherwise good advise. If ten people do what Xubin proposes, 8 or 9 will regret it. Jun 4, 2011 at 19:08
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I think it's fair to say that if you have specific, strong information proving that the friend is actually no credit risk that you know for sure credit agencies in your current country are unable to take into account, then you might consider this; but I'd still much rather loan such a friend the money directly at a reasonable rate of interest than take on the responsibility for their loan for free. Sep 27, 2022 at 20:44
What are the things to look out for?
Just one thing: doing this foolishness in the first place.
I can't really see how it would help either one of you to do this.
You are putting your credit up for a person with poor credit. Should they default, or not fulfill their obligation, you will suffer the hit to your credit. You have all the risk and none of the reward.
Look, you are a pretty nice person to think about this. If you are wanting to help your friend, there are other ways. Your kindness is a good trait, but from a financial point of view this is a pretty bad plan.
answered May 8, 2011 at 18:34
A better choice, perhaps:
Buy a car yourself. Write a contract where you sell it to your friend on an installment plan, with them responsible for insurance and maintenance. (Check local laws for gotchas.)
If they start missing payments, you own the car, and while you may take a loss, it won't hurt your credit.
