debt

5 reasons you should never be a co-signer

Co-sign? No. Uh-uh. No way. Just don't.
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Co-sign? No. Uh-uh. No way. Just don't. © Minerva Studio/Shutterstock.com

Co-sign? No. Uh-uh. No way. Just don't.

Your child needs $10,000 to make up a college tuition shortfall. Your single-mom sister wants to buy a house with a yard for her kids. Your nephew has a brilliant idea for an exciting new business he says is guaranteed to make millions.

At some point, a family member (or a friend) may approach you to co-sign a loan to make a dream come true.

On the surface, agreeing to be a co-signer seems like a helpful, low-risk -- and even benign -- gesture of support.

But it's far from that.

The bottom line is that you are left holding the bag for the entire loan -- no matter what -- if the person should happen to default, warns Jason Hull, owner of Hull Financial Planning in Charlottesville, Virginia.

"It doesn't matter if the person who asked you to co-sign has a sob story that would hit the top of the country charts if it was made into a song. The bank won't care," says Hull.

So is there ever a reason you should sign on the dotted line to vouch for kin or comrades on a loan?

Absolutely not, agree the experts. And here's why.

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