What is the simplest answer to whether you should co-sign a loan for a family member? "No."
This is what too many co-signers wish they had said when they were invited to co-sign a loan, even for an adult child or parent.
Co-signing a loan does not always go wrong, however.
There are times when a co-signed loan is just the boost your family members needs. It can work well sometimes - if you can answer "yes" to all these questions:
Do you understand what co-signing means
[1945001?] When you co-sign on a loan, it is really your loan, too.This is true even if you do not get ready. Too often, people say: "I do not think it's really my loan" Sorry, but it's really your loan
Can you afford to pay the loan you [1945007?]
Never co-sign a loan that you are not willing to pay if the other party is late This is an absolute rule -.. Without exception
Over half co-signed loans are eventually paid by the co-signer. Tweet this
Remember that if you make payments, the borrower still has possession of it he or she bought with money. you could be making payments while the borrower in default is always driving a nice car.
If you put up collateral such as your home, you could lose if the borrower defaults on the loan.
Can you meet your other financial goals while you co-signed on the loan?
What happens if you decide to refinance your home or your credit application when you co-sign on a loan? In the eyes of your potential creditor, you have more debt now.
There may be more difficult to get a loan or credit when lenders know that you are on the hook for the loan to someone else.
is it ready for a good cause?
When you co-sign, you do someone a favor.
There had better be for something important - maybe even change lives -. such as education or buying that first clunker car to get to a job
do not even think to co-sign a loan so the borrower can not really afford. Tweet this
If a luxury car or motorcycle is out of their reach, they are better to save money and improve their own credit until they can get themselves.
family member can pay for it in some other way?
do not rush to co-sign if necessary.
Of course, it is easier to get a loan if mom signs for it. Your family member may be surprised that they can qualify for a loan if they try.
Avoid signature loans, if possible, students.
Start with federal student loans, which do not require co-signers. Federal loans generally have better terms than private student loans, anyway.
The person has been faithful to this day?
If the reason for your child or parent needs a loan he or she is lousy credit and can never seem to get ahead, think twice before you co-sign .
you might want to give just one more chance member of your family, but your chances of being stuck with the bill are high.
If a family member has proven to be reliable in the past, that's fine.
Otherwise, you are better to give an amount of money you can afford to lose. If you can not afford to give money, you can not afford to co-sign for her.
If your child or relative by default on the loan, you will not only make payments, but your relationship with him or her is likely to suffer, too.
do not let this happen to you.
did your co-sign a loan for the parents when you were a beginner?
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