debt

5 reasons you should never be a co-signer

Co-sign? No. Uh-uh. No way. Just don't.
Previous
1 of 6
Next
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.

Previous
1 of 6
Next

advertisement

Show Bankrate's community sharing policy
          Connect with us
advertisement
CARDS WEEKLY NEWSLETTER
Credit cards on a table

Get advice for managing credit cards, building your credit history and improving your credit score. Delivered weekly.

Debt Adviser

How do I recover from a car repo?

Dear Debt Adviser, This one's a doozy: Back in 2009, during the recession, I lost my job, my vehicle was repossessed, and it sold for more than the loan amount. The repo is now on my credit report, and my score is in the... Read more

advertisement
Partner Center
advertisement

Connect with us