Why You Should Never Co-Sign A Loan For Anyone
A list of really bad things that will happen to you if you are foolish enough to lend your good name toward the bad credit of someone else after lenders rejected them.
On our blog for years we have warned people against co-signing a loan for another person.
But there is no shortage of idiots who don't listen to solid financial counsel, and when they fall, they fall big.
Here's just a couple of talking points from my original blog post lined to below:
Disadvantages to Cosigning a Loan for another person:
You are really just guaranteeing this loan which your friend is applying for, you are guaranteeing this loan will indeed be paid back by your friend.
It causes really bad situations when a boyfriend and a girlfriend cosign a loan together then break up later. 100% of the time they break up. And 100% of the time the person stops making payments, leaving the other holding the bag.
If the person you cosigned for defaults, you must start making payments for a car you don't even own. You may even have your own car loan so congratulations, now you have 2 loans.
If you don't pay the car loan after your friend defaults, the car gets repossessed, and YOUR credit, that's right buddy, yours gets ruined along with your now former friend's credit. Congratulations, now 2 idiots can't ever get a car loan.
When you cosign a loan for someone, your credit history will get a ding, your good name and credit are diluted now because that cosigned amount is a potential loan balance waiting to happen whenever your friend defaults on the payments, probably by next month.
When you cosign a loan it shows up on your credit report, and your creditors will take that into consideration.
Car dealers trick you with the Straw Purchase Scam. You think you are cosigning for a friend, but the snaky dealer is the craftiest beast in the forest and sneakily makes you sign the line as the primary buyer, now the loan is in your name!
These are just a few of the reasons why you should not cosign. If you still disagree with me, seek medical attention immediately, otherwise there is no hope for you.
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