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Cosigning a Loan

Cosigning a loan is often the only way someone with bad credit or no credit history can get financing. Keep in mind, if the borrower defaults, the creditor will require paymentsfrom you, and it can damage your credit rating if you cannot make the payments.

Should you decide to cosign a loan, protect yourself by asking the lender to notify you in writing if the borrower misses a payment. This will give you the opportunity to make late payments without having to pay the entire balance immediately. Get copies of all-important papers, from either the lender or the borrower. This documentation will prove invaluable to you should you get pulled into a dispute between the lender and the borrower.

By taking these simple steps, and exercising your own good judgment, you may be able to help someone in need without suffering financial consequences in the end.