The Plague of Co-signing

The worst is yet to come…

This is the trend when co-signing for someone that otherwise
would not be able to qualify for a loan on their own.

But wait a minute – What if?

There is no if, ands, or buts…  Period.

When you Co-sign with another person you are flirting with
dangerous waters. There is no way out once the ink dries
from your signature on the contract.

Now some of you are probably thinking:

Are you having a bad day, Tim?

I want to help my brother purchase his first home. 
– I want to help my girlfriend get a new car.
– I want to help my daughter buy a yogurt franchise with a SBA loan.

It will not work out the way you are hoping.

They want something they can’t afford.  You feel like you are doing
the right thing, but you are helping them with something they
just can’t handle.

Here is the reason why I am firm on this one.

1. Cosigning = your loan
2. You are binding yourself to a legal document
3. You are putting your own credit score at risk
4. You can eventually destroy a friendship or family relationship
5. You could end up being sued for repayment
6. The odds are you will be the one paying off the loan

Banks are smart, they loan money to people that can show
they are qualified to repay the loan.  When you cosign, guess
who they come looking for when the borrower stops making
the payments?   YOU

Most people go into this blindly thinking their friend or family
member would never let them down since they just did
them a favor.

There is no favors here.  Do them a favor by not letting
them get a loan they can’t qualify for.

In my book Money on Your Terms, I wrote that the
Federal Trade Commission did a study where they found that
75% of all co-signed loans are ultimately
repaid by the co-signer.  Not the original borrower.

This stat shows that the odds are against you.  There is just too
much risk involved.

My advice, avoid this like you would avoid the plague.

Just stay away from co-signing with others who can’t qualify on their own.

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