Expert: Joe Montgomery - 5/19/2007

Question
QUESTION: I am interested in either a personal or secured loan.  I have a house with about $700,000 in equity.  The mortgage is always paid on time.  I have bad credit (assume the worst).  I would like to get a $20K loan.  My mother is on the house and I do not want to request her to sign anything.  How can I accomplish my goal?  Is this do-able?  I have had the same job for 3 years and can make the payments.  I will be using the money to purchase a used car.

ANSWER: Based on the details you've given me, I don't think you can accomplish your goal.  If your credit is a "worst case", then lenders are going to want collateral, and if the lender is using the car as collateral, depending on how bad your credit is, they will want 10-20% down.
If you can't use the equity in the home, since you don't want your mother to sign anything, that issue will not matter.
I recommend you talk to a car dealer and see exactly what they can do for you-- they usually have 1 or 2 lenders who are willing to take a risk, but as I said, be prepared to put some money into the transaction.

---------- FOLLOW-UP ----------

QUESTION: So, are you saying that if I did get my mother to sign a lien (I guess a lien is what we are talking about? not sure), this would be something that could likely be done?  

Answer
Depending on all factors involved-yes.  If you actually have $700,000 in equity, there are quite a few companies that would like to help you out.  Granted the rate might not be the best, but I have recently reviewed loans in which nothing-- not even the present mortgage was current, yet the lender made a loan to 80% of the value of the home.