Watching your wallet: Should you co-sign for a loan?
LANSING, Mich. (WILX) - There’s two ways to look at co-signing. Because it can be a 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 cosigning with another individual, basically you’re signing up to ensure that you’re responsible to make sure that, that bill is paid.”
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. Something to consider: Even if you are just co-sign 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.
Dale said, “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.”
If your are co-signing for your kid, maybe you have them pay you each month and you take care of the actual bill, so you know it’s getting paid on time.
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