DROPPING JEWELS: DON’T CO-SIGN THAT LOAN!
Let’s talk about co-signing, because this is one of those things that sounds simple until somebody stops paying.
A friend, family member or somebody you care about comes to you and says, “I just need your name on it.” They may tell you they can handle the payments. They may promise you will never have to worry about it.
That sounds good.
But the lender is asking for a co-signer for a reason.
When you co-sign a loan, you are not just saying you believe in that person. You are agreeing to be responsible for that debt too. If they miss payments, those late payments can show up on your credit. If they stop paying completely, the lender can come looking for you.
And this has been a problem for a long time. Federal consumer information has warned that on some defaulted co-signed loans, as many as three out of four co-signers were eventually asked to repay the debt.
Think about that.
You were trying to help somebody get a car, an apartment or maybe a loan, and now you are making payments on something you never planned to own.
And here is another part people forget. Bad payment history can stay on your credit report for years. So their financial mistake can follow you when you are trying to buy your own car, refinance your house or apply for credit.
Family does not change the contract. Friendship does not change the contract. Love does not change the contract.
Before you co-sign anything, ask yourself a simple question.
If this person never made another payment, could I afford to pay this entire bill myself?
If the answer is no, that may be your answer.
Sometimes helping somebody means giving advice, helping with a down payment or helping them build their credit.
You do not always have to put your own financial future on the line.
You can love somebody without co-signing their debt.
And sometimes the best financial decision you can make is simply saying, “I love you, but I can’t sign that.”
Check out Dropping Jewels with The Madd Hatta weekdays at 5:26 on Majic 102.1.
