Co-signing loans for family members can at times lead to an unfortunate ending. It is common to hear of instances where family members have co-signed on a loan only to suffer consequences after because loan terms were not met.
If you co-sign a loan you are included as someone who is responsible for the debt taken which in return protects the bank or lender’s loan. In the case where payments are missed, then you as a co-signer will be required to take responsibility of the debt and in some instances depending on the contract you may be required to repay the whole loan instantly.
A key point to remember is that when a bank or a lender asks the person who’s taking the loan to come forth with a co-signer, they are pretty much saying that everything for them indicates that the loan will not be paid back. Having someone involved as a co-signer basically guarantees them that regardless of anything, they will be paid at the end of the day.
It’s Not Easy To Say No
Family is family and sometimes it’s tough for us to say “no”. Your child is asking for a co-sign on a loan of $25,000 for a business they may want to start. Show them other ways to acquire the necessary funds. Be helpful in their approach. Show them you care and want to help but dipping yourself into financial uncertainty is something that you cannot afford.
Do not feel guilty for your decision as the person may not see it from your perspective. Keeping a good credit rating and staying positive financially is one of the most important things. Protecting yourself from an unseen circumstance – where you are responsible, is not something to feel guilty about.
Are you still unsure about co-signing? Get in touch with a professional here at GTA Credit Solutions and let us guide you towards the right answer!