Before You Co Sign For A Loan

Before You Co Sign For A Loan



Before you​ Co-Sign for a​ Loan
The want to​ help out our friends is​ something that we are all guilty of .​
It is​ a​ good thing,​ up to​ a​ point .​
At some point in​ your life there is​ a​ good chance that you​ will be asked by a​ good friend to​ co-sign a​ loan for them .​
Maybe they have had credit difficulties in​ the​ past,​ which will make getting a​ loan hard for them .​
Saying no to​ such a​ request can e awfully hard sometimes,​ after all the​ only thing they want from you​ is​ your signature on​ a​ little piece of​ paper right?
Wrong! This is​ a​ decision that you​ should think long and hard about .​
It could affect your life in​ a​ big way .​
You need to​ ask yourself why it​ is​ that your friend needs your help in​ the​ first place .​
If it​ is​ because they have poor credit,​ do you​ really want to​ take the​ chance that they will be responsible now? If you​ co-sign it​ is​ you​ who will be responsible for the​ loan if​ they bail .​
Your credit can be at​ risk here,​ affecting your ability to​ get a​ home loan,​ car loan,​ credit card and so forth for years to​ come.
Before you​ sign anything make sure that you​ understand the​ following:
Your responsibility
When you​ sign the​ contract you​ are promising that your friend will make all of​ their scheduled payments on​ time every month of​ every year .​
Are you​ sure that is​ something you​ want to​ risk your financial life on? Do you​ have the​ ability to​ pay the​ loan if​ they fail to​ do so?
What are the​ risks?
If your buddy needs someone to​ co-sign that means that they are considered high risk .​
If the​ lender,​ who is​ a​ professional thinks it​ is​ a​ risky move,​ what makes you​ think that you​ know better?
What about your credit report?
Doubtless your friend is​ asking you​ to​ co-sign because you​ have good credit,​ which is​ something you​ have always tried to​ keep up .​
If your friend does not meet their payment schedules and amounts it​ is​ your credit that will suffer.
The manner in​ which delinquent payments will be collected
The policies for the​ collection of​ such debts differ from state to​ state,​ so it​ is​ wise to​ check with your local legislation to​ see just how you​ will be affected .​
In some states the​ lender will not even attempt to​ get the​ money from your friend,​ they will go straight to​ you​ for it .​
This is​ because they feel you​ are the​ one that they can actually get it​ out of.
These are not the​ only things to​ be considered when deciding if​ you​ should co-sign for a​ loan .​
The amount of​ credit that you​ can get can even be affected because the​ money you​ signed for can count as​ debt owed by you.
If after thinking it​ over you​ decide that you​ do want to​ help your friend and co-sign for their loan be sure to​ at​ least take the​ following steps to​ protect yourself as​ much as​ possible.
When applying for the​ loan ask the​ lender to​ keep you​ informed of​ any late or​ missed payments on​ the​ part of​ your friend .​
This will help you​ to​ get control of​ any problems before they get too out of​ hand .​
And make sure to​ get copies for yourself of​ all loan documents .​
Keep these in​ a​ safe place at​ home where they are easy to​ find.
While it​ is​ always nice to​ help out a​ friend,​ you​ should not feel guilty if​ you​ decide against it​ in​ this type of​ case .​
The risk to​ you​ is​ enormous and if​ you​ plan on​ buying a​ house or​ a​ car in​ the​ future,​ you​ might want to​ think twice before saying yes.




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