RE: [WTW] Co-Applicant / Co-Signer

[Blaine Kirkpatrick]

On rare occassions, we do utilize a co-applicant for a loan request.  This is most common in marriage, common law, or domestic partner situations.  We are not particular about both individuals being listed on the vehicle title.  The co-applicant undergoes the same scrutiny as a primary applicant, including a credit report and budget analysis.  If the account defaults, we may attempt to collect past due amounts from the co-applicant.  If unsuccessful in our collection efforts, the co-applicant's name is submitted to a collection agency along with the primary applicant's name.  Not a lot of incentive to sign a contract if you're not going to be on the title...

 

On the issue of using a co-applicant for an applicant with poor credit, I have one comment:

 

Your agency goals, and to some extent, national averages, will determine what you find to be acceptable risk and acceptable need.  If your goal is to get someone into a car regardless of their demonstrated success or failure at financial management, then a co-applicant with good credit is one way to secure your investment.

 

If your goal extends to building credit, then the utilization of a co-applicant may be counterproductive.  For example, an applicant whose good credit was disrupted by a divorce (possibly an indicator of circumstance) probably looks different from an applicant who just plain made poor decisions over time (better indicator of habit).  The difference is that one person is rebuilding credit, and the other person is looking for yet another opportunity to use credit without really understanding the mechanics of financial management.  I would match the situation with my agency goals.

 

In regard to your last question about sufficient income:  I can think of a million responses here, but ultimately, if the co-signer doesn't want to lend the money to the applicant, then the co-signer doesn't have to lend money.  A history of adverse credit usually tells a story pretty clearly, and by history, I am refering to consistency of credit that indicates habitual or circumstantial incidences of financial management.  There is always an exception to the rule, the person who really will change overnight, but is an installment loan the best medium for that change?  The income is not the real issue here.  Many very low income people do well with credit on the whole.  The willingness to do what is necessary to make change is, however, an issue.  Again, I would look to my agency mission, and I would weigh that mission with Ways to Work goals and standards.

 

Blaine Kirkpatrick

[EMAIL PROTECTED]

CEAP

 

 

 -----Original Message-----
From: Lex Levy [mailto:[EMAIL PROTECTED]
Sent: Thursday, July 01, 2004 7:36 AM
To: [EMAIL PROTECTED]
Subject: [WTW] Co-Applicant / Co-Signer

Hello All-

 

I have my first Co-Applicant loan going through and am wondering how this is handled.  Do any of you have experience with this and if so, can you tell me the procedure your site follows. 

Do you require the Co-Applicant to complete a Loan Budget Form?  Are they listed on the Car Title?   What if the Co-Applicant shows a pattern of poor credit?  What if the Co-Applicant makes sufficient income to cover the loan with poor credit? etc. etc.

 

Thanks for your help.

Lex Levy,

Ways to Work

Family Services of Montgomery County

Pottstown, PA