100 Words On: Why You Should Never Cosign A Loan for Anyone

Cosigning for a loan is one of the dumbest financial moves you could ever make. By cosigning, you not only assume liability for the borrowed money, but you also make it tougher on yourself to qualify for large loans — regardless of your payment history — because lenders still include cosigned loans as part of your overall debt load.

The bottom line: If a lender refuses to loan money to somebody because their credit history strongly suggests they’d eventually default, why would you ever agree to recklessly risk your good credit rating by putting it in the hands of that same person?

Photo Credit: Ardyiii

11 comments to 100 Words On: Why You Should Never Cosign A Loan for Anyone

  • You think you know someone but in reality you don’t. I have always stayed away from cosigning.

  • Carthell

    Yeah, my family was burned twice:

    -My brother went to jail. He called my mom in a panic over an alleged threat to his life. Five people co-signed his bail premium, and it all fell on me and my mom. Him: “I can’t pay this.” No thank yous, not a card, nothing. Put a virtual big finger in both of our faces.

    -Aunt needed help with purchasing a used car. She’s with a stable employer, she seems right with the bills (thst she showed me). Two years later, the collectors are calling me every few seconds. Call to aunt: “They’re telling me that you’re ignoring their calls! When are you going to do something about this?” *Click*. When we see each other, the atmosphere immediately gets strained. She knows not to ask me anything related to money. I suppose my grandmother was saved this humilation because she had never opened a credit line in her life.

  • I hear the default rate for a cosigned loan is around 85%. Those are some pretty bad odds.

    The couple across the street cosigned for their daughter’s new car. Now, they are driving it.

  • Lola

    My aunt and uncle cosigned for their eldest son’s home loan many years ago. I think he stopped making payments after about 6 months. To this day, they still suffer the repercussions from that, yet in their eyes, the son can still do no wrong. My aunt and uncle didn’t learn their lesson, but my parents learned from their folly: there was never any chance of my parents cosigning for me or my siblings, not for a house, a car, or even a credit card. We grew up knowing that it better be a DIRE emergency if we asked our parents for money!

  • I can get involved my friends’ issues on love, health, and family but not money matters. I have seen a lot of friendships ruined because of money. I do not cosign because I do not want to ruin my relationship with my friends.

  • This is quite true. Money is a sensitive issue and can make people change. So it is better to stay out of trouble by not agreeing to co-sign.

  • I agree, getting close friends, family members or colleagues in is a risk especially if you have a history of missed payments and financial problems. You may think you’ll never require your cosigner to make a payment, however sudden emergencies such as a broken down vehicle or household appliance may mean you are no longer in a situation to make that payment.

  • lumphead

    i cosigned for a house with my sister who immediately started making the payments late…and for some strange reason she thinks I don’t like her…..

  • [...] 100 words on: why you should never co-sign a loan for anyone (Len Penzo). Several other choice words on this topic can be found in Proverbs 6:1-5, 11:15, 17:18, 20:16, and 22:26-27. [...]

  • [...] be repaid.The stakes are even higher when we lend money to our friends and family – or even cosign a loan – because we not only risk our hard-earned money, but we also endanger important personal [...]

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