A recent episode of “The Ramsey Show” featured a caller named Frank from Charleston, South Carolina, who shared a financial mistake that quickly spiraled out of control.
$62,000 Car Loan
Frank said he co-signed on a $62,000 loan for a brand-new Chrysler 300 after his brother-in-law came to him with $20,000 for a down payment and asked for help. “He’s just a big dumb animal, and I love him dearly,” Frank explained. “He came to me and said, ‘Hey, I got 20 grand… but I need help.'” Frank agreed to co-sign despite knowing better. “All I can hear in the background when I got done doing this is Dave saying… ‘One who signs debt for another is stupid.'”
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Now Frank is on the hook for a car payment of $1,100 a month. And things got worse fast: “He’s going away for a very long time on a vacation. An unwanted vacation,” Frank said, confirming that his brother-in-law is headed to prison.
To make matters worse, the car is already about $12,000 underwater. Frank said he could sell it for around $50,000 in a private party sale, but the current loan buyout is $62,000. On top of that, the car is located in Arizona, while Frank lives in South Carolina.
He admitted he’s $5,200 behind on payments, and repossession is now a real risk. Co-host George Kamel warned him that it’s already too late: “You already did it, my friend… they’re going to sell it at auction for like 15 grand and you’re still going to owe the difference.”
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Frank’s wife, who advised him not to cosign in the first place, now refuses to help financially. “My wife won’t give it to me,” Frank said about the money needed to catch up on payments. Kamel chimed in, “You might as well live in this car at this point.”
Despite all this, Frank still doesn't have enough cash on hand to cover the gap after selling the car. He said he has around $10,000 to $12,000 in liquid savings and a few upcoming real estate closings that might help. He’s also scheduled a meeting with his credit union to try to get a personal loan.
Kamel urged him to move quickly: “Get current as fast as possible. Sell it as fast as possible.”
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When asked how long ago he co-signed, Frank said it was about a year ago. Since then, he’s been trying to get out of the deal. “He was like, ‘I’ll get it in someone else’s name… I’ll get you off this in six months, Frank. No worries.'”
Kamel perhaps summed it up best with this big lesson: “If a sketchy lender doesn’t trust you to give you a loan, maybe you shouldn’t trust that person. The number one reason I don’t cosign for anyone, I don’t know if they’re going to be a future criminal.”
At the end of the call, the Ramsey team emphasized the most important takeaway: Never co-sign, not even for family. As Frank put it, “I’m writing that on the back of my truck right there. Don’t sign for anyone.”
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Image: Imagn Images
