debt

5 reasons you should never be a co-signer

Your relationship will suffer
Your relationship will suffer © wavebreakmedia/Shutterstock.com

Your relationship will suffer

"Nothing comes between friends or family like borrowed money," says Hull. "Nobody wins."

The borrower feels guilty about it. You feel uncomfortable asking the borrower about the loan payments. And that's when things are going well. If the person for whom you co-signed fails to make good on the debt, your relationship can go south very quickly, Hull says.

"Relationships can be compromised and sometimes severed," adds Tayne.

Bad feelings can get complicated if it is not brazen irresponsibility -- but rather unforeseen circumstances such as a job loss -- that keeps a borrower from paying back a loan. And remember that you also could be left with the burden of the debt if the borrower becomes sick -- or dies.

Co-signing, concludes Hull, is a financial agreement with no upside. "You are on the hook for all of the potentially negative outcomes," he says, "but you get none of the benefits."

advertisement

Show Bankrate's community sharing policy
          Connect with us
advertisement
CREDIT 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 spend my $5K bonus?

Dear Debt Adviser, I'm about to receive a $5,000 bonus, and I'm wondering what to do with it. Should I save my bonus or use it to pay off my car loan? I have less than $3,000 left on my loan and at least eight months' of... Read more

advertisement
Partner Center
advertisement

Connect with us