Would you co-sign or lend money to a family member?

[Anonymous]

Under what circumstances would you either co-sign or give/loan money to a family member (who is not your child)?

I am asking because our nanny needed me to verify her income because she is co-signing for a niece’s mortgage. I was like, ooh, are you sure you want to do that? I think she thought I was crazy to be concerned. She said she has done it before when niece needed to buy a car and it all worked out.

So, I am wondering if I am too stingy. For my own kids, I would likely co-sign or help, but probably not beyond them. I would always help family (parents, siblings, nieces/nephews) in an emergency but it would be a gift within the amount I can reasonably afford, except for life/death things. Then I would do whatever I could. But I would never co-sign for a niece’s mortgage. I have floated family members when they needed to buy and sell at the same time and they needed cash for a short amount of time until they could sell the old house.

Maybe I have a very US view of this and we are too independent? Interested to hear what others think.

[Anonymous]

My husband, siblings and their parents have all lent each other money at some point. They are war refugees and have a very strong bond and "family first" mentality. My husband and BILs also send money to their native country to help distant relatives they have never even met... because this is what's expected. The ones who managed to get away help the ones who were trapped and couldn't make it.

[Anonymous]

I too would only loan or co-sign for kids.

I love Ashley Ford and what she does is when people ask for money and she wants to help, it’s a gift. If people want to pay her back she’ll accept it but doesn’t expect it at all. This helps her maintain good good relationships and she has no financial issues around it because she doesn’t have to worry about needing the money back.

My dad co-signed a loan for my brother and now his credit is shot and he’s getting collection notices not because my brother didn’t pay him back but because there is somebody out there with my brothers same name who has a ton of debt. I know this is a really unusual situation but I wouldn’t risk it for somebody who wasn’t my child.

[Anonymous]

Anonymous wrote:I too would only loan or co-sign for kids.

I love Ashley Ford and what she does is when people ask for money and she wants to help, it’s a gift. If people want to pay her back she’ll accept it but doesn’t expect it at all. This helps her maintain good good relationships and she has no financial issues around it because she doesn’t have to worry about needing the money back.

My dad co-signed a loan for my brother and now his credit is shot and he’s getting collection notices not because my brother didn’t pay him back but because there is somebody out there with my brothers same name who has a ton of debt. I know this is a really unusual situation but I wouldn’t risk it for somebody who wasn’t my child.

Sorry I meant to add that I see you have the same approach and I think it’s really wise.

[Anonymous]

Would give (and have given) money to siblings, cousins and parents.

Have loaned money to my mom once (as she loaned money to me when I was in college). At this point anything she needs is given as a gift.

I suppose I would co-sign on a Parent Plus Loan or something for DD, but I would consider that my loan.

Would not co-sign on anything else, with anyone but my husband. If I can't afford to give the money I can't afford to be involved.

[Anonymous]

My cousin did this for his parents (my aunt and uncle) years ago with a home equity loan because their credit was shot. Lo and behold, aunt and uncle didn’t pay and now all three of their credit has taken a hit.

I’d never do it. If I were in a position to do so I would give a small amount of money for a down payment, etc. - even with the expectation of repayment from the other party - but I wouldn’t intertwine my credit with theirs. Most people have mediocre to bad credit.

[Anonymous]

GIFT. Not loan.

Never, never, never. A huge lesson learned and we are recovering this year. We loaned to three people - family, employee and friend, years ago. They lived large but had problems returning the money back. We had to really beg to get the money back, and they returned it as if they were doing us a favor. We were lucky because we did not lose out a huge amount. In 10 years we were not given a single cent as interest. We also did not have any paperwork so we did not want to come down very hard.

In the end, the relationships suffered.

[Anonymous]

Your question is not "Would you co-sign or lend money to a family member" rather it is "Would you co-sign a loan for an extended family member?"

So would I co-sign a loan for someone in my nuclear family? Yes
Would I lend money to someone in my nuclear family? No, I would give it to them
Would I give money to an extended family member? Yes
Would I lend money to an extended family member? Yes
Would I co-sign for a loan for an extended family member? No

Would I give money to a non-family person? Yes
Would I lend money to a non-family person? Yes but this amount would be low and I would categorize it as a gift mentally so as not to expect it back

Have I actually done all of the above? No. I have done everything except co-signing.

[Anonymous]

Anonymous wrote:GIFT. Not loan.

Never, never, never. A huge lesson learned and we are recovering this year. We loaned to three people - family, employee and friend, years ago. They lived large but had problems returning the money back. We had to really beg to get the money back, and they returned it as if they were doing us a favor. We were lucky because we did not lose out a huge amount. In 10 years we were not given a single cent as interest. We also did not have any paperwork so we did not want to come down very hard.

In the end, the relationships suffered.

I have to add here, that I have given huge gifts of money to my brother to help him out. I have no expectation that it will be returned, even though he sees it as loan.

Any money - loan or gift - has to be of the amount that you do not care if it is lost. It should not expose you to any financial hit - your retirement, college funds, medical, housing.

Ask yourself this question - if you need money today, who will give it to you? My answer is that probably - no one.

[Anonymous]

Anonymous wrote:Your question is not "Would you co-sign or lend money to a family member" rather it is "Would you co-sign a loan for an extended family member?"

So would I co-sign a loan for someone in my nuclear family? Yes
Would I lend money to someone in my nuclear family? No, I would give it to them
Would I give money to an extended family member? Yes
Would I lend money to an extended family member? Yes
Would I co-sign for a loan for an extended family member? No

Would I give money to a non-family person? Yes
Would I lend money to a non-family person? Yes but this amount would be low and I would categorize it as a gift mentally so as not to expect it back

Have I actually done all of the above? No. I have done everything except co-signing.

One more thing, I would never charge interest in any of these lending scenarios.

[Anonymous]

Interesting that you mention that you have a US-based perspective on this. I wonder if other countries have the same issues with credit? Is it as bad for somebody in other countries if they have bad credit?

[Anonymous]

Anonymous wrote:

Anonymous wrote:GIFT. Not loan.

Never, never, never. A huge lesson learned and we are recovering this year. We loaned to three people - family, employee and friend, years ago. They lived large but had problems returning the money back. We had to really beg to get the money back, and they returned it as if they were doing us a favor. We were lucky because we did not lose out a huge amount. In 10 years we were not given a single cent as interest. We also did not have any paperwork so we did not want to come down very hard.

In the end, the relationships suffered.

I have to add here, that I have given huge gifts of money to my brother to help him out. I have no expectation that it will be returned, even though he sees it as loan.

Any money - loan or gift - has to be of the amount that you do not care if it is lost. It should not expose you to any financial hit - your retirement, college funds, medical, housing.

Ask yourself this question - if you need money today, who will give it to you? My answer is that probably - no one.

If they had it, my parents would give me money. Same with MIL. Probably my siblings.

[Anonymous]

Is your nanny Hispanic?

It's a cultural thing. My family is from South America and when we moved to the U.S. family helped us out by co-signing on car loans etc. until my parents were able to build up credit and secure jobs. No one in my extended family would blink twice about helping out someone who needs a hand.

[Anonymous]

I would only do this if I was prepared to kiss that money goodbye, and prepared to take over the mortgage if need be. I never loan money, I give it to relatives.

[Anonymous]

Anonymous wrote:Is your nanny Hispanic?

It's a cultural thing. My family is from South America and when we moved to the U.S. family helped us out by co-signing on car loans etc. until my parents were able to build up credit and secure jobs. No one in my extended family would blink twice about helping out someone who needs a hand.

Yes. From South America. That is why I considering the US based aspect of it for me. I feel kind of stingy. She has so much less then we do and is very much willing to do this.