If you are considering being a co-signer on a friend or family member’s loan application be careful. In these time of economic turmoil it is far to easy to get your credit rating damaged when other people borrow money.
Here is a good tip from Bankrate that I saw recently on their site:
I am constantly inundated with e-mails from people who co-sign for girlfriends, boyfriends, brothers, sisters, even co-workers, and all these e-mails tell unhappy tales — the person stopped making payments, ran off with the vehicle or otherwise left the co-signer holding the bag.
This is not uncommon in any way shape or form. I have personally had friends and relatives whom I lent money to never repay. The family lines were strained and stay strained for years to come and frankly, in one of my personal cases, the relationship is still damaged today.
I would now say no to any family member or friend who asked me to lend them money or co-sign a loan for them. It’s just not worth it, and if you are in a position whereby one of your family members or close friends is asking for a loan or asking you to co-sign a loan – don’t do it.
If they are really good friends or close family members (true friends) they will not hold it against you for long. They shouldn’t hold it against you at all, and if they do, let it go and be gone.
What were they thinking hitting you up as a co-signer anyway!
One note: that is the exception when we lend money or co-sign a loan for one of our children. Even then I would be very careful not to end up with my own credit rating being dragged through the mud. Our children need to learn fiscal responsibility too.
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A LOAN CALCULATOR FOR CRUNCHING YOUR NUMBERS IS BELOW; Enter your loan amount, how many years, the interest rate, and payment frequency (14 for biweekly, 30 for monthly, 7 for weekly. Very helpful so you know exactly what the loan will cost you in interest payments and you will know the total COB (cost of borrowing).
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