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You aren't obligated but you should want to help out. They may have not paid there bills in the past, but that can change. You know your family members situations better then any bank...
If they haven't paid their bills in the past, why SHOULD I help them? Let them demonstrate some fiscal responsibility first before hitting me up for help with a loan.
Shielding a financially irresponsible person from the negative consequences of their behavior isn't helping, it's enabling.
If I don't have the money I won't. Example: I have 100k in savings and one of my family members wanted me to cosign for a car...why wouldn't I?
Because in the larger scheme of things 100k isn't a huge amount of money, and long-term you can't afford to lose 10-30% of it? If you cosign a loan, YOU are 100% responsible for repaying it if your relative defaults on it (which they may very well do). If you'd be unwilling to just buy them a car, you shouldn't cosign their loan. Don't give away money you truly cannot afford to lose!
Because in the larger scheme of things 100k isn't a huge amount of money, and long-term you can't afford to lose 10-30% of it? If you cosign a loan, YOU are 100% responsible for repaying it if your relative defaults on it (which they may very well do). If you'd be unwilling to just buy them a car, you shouldn't cosign their loan. Don't give away money you truly cannot afford to lose!
If I bought them the car then I would truly lose the money. By co-signing they'll be paying for it...if I have to make a few payments for them fine, I'll be more reasonable then some bank.
I see what you are saying plus he was just your brother-in-law so I might not have helped either. But if it were my biological brother I'll definitely help at least for a little while.
If I bought them the car then I would truly lose the money. By co-signing they'll be paying for it...if I have to make a few payments for them fine, I'll be more reasonable then some bank.
They'll be paying for it only IF they actually choose to repay you. You can't force them to do so, and if they default you'll have absolutely no legal recourse against them. And you'd be surprised just how many people "forget" or suddenly "can't afford" the payments once they gain the object of desire.
"Don't loan money" is generally sound advice. There can be limited exceptions to that rule (a few have been mentioned in this thread), but they are rare. In general, if a bank whose business is the loaning of money is unwilling to extend your relative a loan, that's a big red warning flag you ignore at your peril.
I see what you are saying plus he was just your brother-in-law so I might not have helped either. But if it were my biological brother I'll definitely help at least for a little while.
If they were on vacation while losing their house, they are bad with money and make bad decisions. Giving someone money who has already proven themselves to be bad with money is just enabling them. It is essentially no different than giving an alcoholic a drink. It might keep them going a bit longer, but it doesn't fix the underlying problem.
If someone is honestly trying and just can't make ends meet, that is a LOT different from someone who takes the family to Disneyland while their house payment goes unpaid.
If someone is honestly trying and just can't make ends meet, that is a LOT different from someone who takes the family to Disneyland while their house payment goes unpaid.
It's certainly different from an ethical standpoint, but it may not be different from a financial standpoint. Is there an end in sight to their financial woes? Do they have a realistic plan for how to get on a better long-term financial footing? If not, are you willing to take on the full burden of the loan if they can't pay it back despite their best attempts?
When people loan money, they generally expect to be repaid. Don't loan money to someone who is unlikely to repay you! It just causes hard feelings. (Gifts, on the other hand, provided they are freely given, are fine.)
It's certainly different from an ethical standpoint, but it may not be different from a financial standpoint. Is there an end in sight to their financial woes? Do they have a realistic plan for how to get on a better long-term financial footing? If not, are you willing to take on the full burden of the loan if they can't pay it back despite their best attempts?
When people loan money, they generally expect to be repaid. Don't loan money to someone who is unlikely to repay you! It just causes hard feelings. (Gifts, on the other hand, provided they are freely given, are fine.)
The person I quoted was saying it was "bad" to not just give money that you have to someone who needs it. I was disagreeing because sometimes it just delays the inevitable. I do agree with you that it doesn't necessarily make a difference when it comes to cosigning for a loan.
I wouldn't do it. If I could afford to repay the loan if they defaulted, I'd just give them the money.
I might make an exception if the family member wanted to take out a loan for the purpose of building credit. But I still wouldn't do it unless I was in a position to write a check to pay the loan off without having to sacrifice anything. And I'd go into it with the mindset that I'd eventual wind up paying it off in order to avoid hard feelings if the primary borrower defaulted.
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this is what I am talking about...selfish. How could you let him lose his home while you had enough money in the bank to stop it??
