Today’s post is prompted by a client question we heard last week. It isn’t something we have tackled in a long time, so thought it would make a good blog post. The question was ‘My new partner is struggling with debt and I’m planning a car loan, what should I do?’
We tasked our Waterloo car loan team to tackle this tricky subject on when a partner is struggling with debt. This is what they came up with.
New Partner is Struggling with Debt
When you meet someone new, the last thing on your mind is assessing their creditworthiness or checking their credit score. That will come eventually but not until a way down the line.
But, if you’re planning your own financial moves, in this case a car loan, and you find out a new partner is carrying debt, what do you do?
Get it all out
The first thing to do is to have a frank and honest conversation about it. While it’s still early days, if you’re considering their financial wellbeing, things must be going well.
Have an open and honest conversation about money. Talk about salary, attitude towards money and that debt.
Try to get a figure from them about how much in total they owe and to whom. Don’t judge. Don’t criticize. You need to know the real picture before you can do something about it.
Discuss the debt
You need to know how much they owe, how much they are paying off, how they view the debt and whether they are managing. All these things will impact their financial future but could also impact your future together.
If they are worrying about debt, they won’t be their best self. If they are struggling to make payments, they won’t be able to enjoy life as they otherwise might.
It isn’t all about them either.
You need to know what you’re getting into. Whether you’re safe getting your car loan while your partner is struggling and whether you’re willing to help them out.
If a partner has debt, it doesn’t impact your credit score or credit report. The only time it does is if the debt is in joint names. Then it’s both your responsibility to pay it.
Otherwise, while it may seem cold, their debt is their problem. Except it isn’t as we don’t want them to suffer.
Work out a plan
Offer to help them by setting up a budget, helping them manage money and be more responsible. Don’t judge them. Don’t criticize them. Just help them if they want it.
Not everyone will be comfortable accepting help, especially from a new partner, but if you can’t help them, who can?
Work out a budget and a spending plan. Have them pay as much of their debt as possible, as quickly as possible. Make sure they have automatic payments for all debts and make sure they aren’t just paying the minimum if they have cash to spare.
As for your car loan, you have to make a call. If you need the car to get to work, you should proceed anyway. If you don’t need the car and just wanted one, you have a decision to make!
For those of you who know that you have a challenging credit situation, please visit Dixie Auto Loans where we have a team of credit specialists ready to help you get approved for a car loan today!
For any questions or concerns, please don’t hesitate to contact us here!