Should you ever co-sign for a loan?
RICHMOND, Va. (WWBT) - Not everyone qualifies for a loan, sometimes you need a little help from a co-signer. But should you do that?
There are two ways to look at co-signing because it can be very positive or it can be a very negative experience.
Cherry Dale, a financial coach with the Virginia Credit Union, says you want to look at what you are co-signing for and the overall risk.
“If you are co-signing with another individual. Basically, you’re signing up to ensure that you’re responsible to make sure that, that bill is paid,” Dale said.
If if the other person is the primary debtor for that loan, you are still responsible for the debt. Especially, if they default and don’t pay.
Dale says you have to really trust the person you are helping out.
The loan could impact your ability to borrow at the end of the day. Even if you are just co-signing for a $5,000 credit card for your kid; it will count against you if you are looking to buy a home.
Dale says communication is key. Setting the rules for who is paying it and knowing when the bill is due.
“One of the things you can do is just to make sure you have set up an account where you can both view it. Most financial institutions will do this with you online,” said Dale.
If you are co-signing for your kid, maybe you can have them pay you each month. That way you can take care of the actual bill, so you know it’s getting paid on time.
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