How should I co-sign a loan ?
When people are in a tight financial position, they are tempted to get a loan. Unfortunately for young adults, getting a loan can be hard, especially if they don’t qualify for one. If you need to borrow money for buying a new car, paying for education or getting a new home, but you insufficient income or a bad credit history, you still have hope – you just need to find someone who would co-sign a loan with you.
A co-signer, which is also known as co-borrower or co-applicant, would accept his or her responsibility for repaying the loan with you, the primary borrower. This means that if you can’t pay your debt, the co-signer must be able to pay it for you.
If you’re going to co-sign a loan, make sure you know the amount you need to borrow. Don’t borrow too much or too less money. However, you need to make sure you can pay off the loan amount in the allotted time. Once you have determined how much you need, look for a co-signer that you trust. He or she should be willing to take the risk of co-signing, have a good credit history as well as a stable and high income.
Once you have all the paperwork needed to obtain a loan, fill in the forms with your co-signer, since the lender would also need the financial information and credit history of your chosen co-signer. Make sure you understand the terms, conditions and policies involved with the loan. This would include the monthly payments, length of repayment, loan amount and possible collateral required. File the application form and wait for the approval of the lender.
Once your loan has been approved, you need to make timely loan payments in full. Be aware that if you miss a payment, your credit as well as your co-signer’s credit would be affected. If you feel like you’re going to miss a payment, tell your co-signer, so he or she could prepare. In addition, make sure you find a loan that would benefit your credit as well as your co-signer’s credit, since most of the lenders would only give credit to the co-signer. This is particularly important if you have bad credit and you want to repair it by co-signing a loan.
