Become a co-signer of a personal loan

Being a personal loan co-signer for a friend or family member is a very generous offer as it will likely make a difference to whether you qualify for such a loan. 

The decision to become a should not be taken lightly. 

Potential co-signers have a responsibility to educate themselves on how this situation affects them, especially regarding their liability for the loan if the borrower defaults.

Most co-signers are unaware that this loan will show up on their credit report. 

Note that the personal loan you are affiliated with is used in calculating your debt-to-income ratio, so this may affect your ability to obtain your own loan. 

It can also affect the interest rate you pay for your own loan. 

If co-signing a personal loan for a friend or family member seems like a good idea, after a set number of timely payments, the borrower will simply attempt the loan in their own name and repeat. 

Please understand, the more money you co-sign, the more you can expect to be part of this loan.

Loans can affect a co-signer's creditworthiness, both positively and negatively, so it is important to set up the loan so that the co-signers can access their account information. 

This allows you to determine what has been paid on the loan and what is still owed. 

Lenders are encouraged to notify borrowers as soon as they have a problem with late payments or non-payments. 

Co-signers often don't realize there was a problem with the loan until it affects their credit score.

Co-signing loans for friends and family can help them, but you should be aware of how it can affect not only your credit score, but your relationships as well. 

Nothing ruins a relationship faster than money issues. 

It is important for co-signers to consider the circumstances leading to those who need it in the first place. 

If you neglect simple money management, you are doing them and yourself a disservice. 

But it is the result of circumstances beyond their control. 

You might want to consider it.

To minimize your risk as a co-signer, do not make a habit of giving this to friends and family. 

The word spreads like wildfire as more inquiries come in. 

Don't take out a personal loan if you feel your credit and finances won't keep up if the borrower doesn't repay the loan. 

Saying no can be difficult, but being able to do, so is important.

Consider getting confirmation from the borrower that payment will be made, such as a regular bank statement or canceled check. 

To further reduce your risk as a co-signer, insist that your borrower take out personal loan insurance that can cover loan payments for a period of time due to unemployment, illness, or death.

Co-signing a personal loan for someone is more than just your signature. 

You are putting that person's financial history and value in jeopardy. It is important to carefully assess the borrower's cash needs and spending patterns. 

If you owe others or are constantly living beyond your means, walk away with a clear conscience. May be a co-signer