It’s easy to read a headline about someone making an unfortunate, costly decision and to Monday-morning quarterback on how you’d never fall for that. But a recent report from CTV News about a consumer who found themselves on the expensive end of a bad decision is better used like an autopsy report: what went wrong, and what can we do to make sure it doesn’t happen again? Like an afterschool special, there are lessons to be learned here.
A Mississauga man co-signed a car loan for a friend three years ago, according to CTV. A year after purchase, the vehicle was heavily vandalized by the purchaser’s ex-boyfriend and rendered undrivable. The vehicle has sat, damaged and unrepaired, in a collision centre ever since. And once the owner eventually stopped making payments, that foisted the co-signor of that car loan onto the hook.
With the assistance of CTV’s Pat Foran and APA’s consumer advocate George Iny, we can reconstruct (and deconstruct) some of the machinations — and red flags — surrounding this transaction.
The APA has seen it all. “Our mystery shopper witnessed a used car dealer and a buyer putting pressure on [the buyer’s girlfriend] to cosign a loan for a sports coupe. The couple appeared to be in their early 20s, and it wasn’t pretty. In the end, the girlfriend co-signed… in tears. In that case, the dealer told the male shopper that his employment history didn’t qualify him for the loan, but the girlfriend appeared to have a steady job and enough income.” If this sounds familiar to you, please let this serve as your warning to walk away — and probably from more than the car.
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APA’s suggestion: Cosign only if you can afford to take the loss on a repossession or are prepared to pay for the vehicle as a gift to the person you are guaranteeing. Lending is supposed to be a science — if a professional believes the buyer is spending so far above their means that a guarantor is required, their assessment should override your longing to come to the rescue of the buyer.