Co-Sign for a Car Loan

Young couple buys a car

The main advantage of co-signing is greatly appreciated by immediate families and close friends. Your pledged signature on the loan provides the borrower to help him/her get started to the path of good credit. It helps opening doors to their financial path obligations. It helps applicant build credit score and credit history.

Understanding the Responsibilities of a Co-Signer

When you co-sign on a loan, you are giving your full pledge to pay on the loan in case of borrower’s failure to pay. When the borrower misses the payment, the creditor can come after you because you’re responsible, in some way, for the loan. Your credit score may be affected if the borrower is late with any payments. It may also affect your ability to obtain loans for yourself since you have taken on the obligation to pay the loan.

Do you trust the Borrower?

Trust is the powerful word to give out to the borrower. You entrusted your support and committed yourself to the borrower until the end duration of the loan. Evaluating your child, parent, sibling or friend for trustworthiness might be necessary if you don’t want yourself to end up paying someone else’s debt.

Bottom Line

Co-signing on someone else’s loan is a big risk and a big commitment. It’s a tough decision and the one that shouldn’t be made lightly.

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