Comments on: No-Nos #241: Cosigning Loans with Your Pals

By: Mapgirl’s Fiscal Challenge / Articles I liked last week

Mapgirl’s Fiscal Challenge / Articles I liked last week — Thu, 22 Feb 2007 05:21:36 +0000

[...] Cap on co-signing loans. I bet you can guess his answer. [...]

By: newsgirly

newsgirly — Mon, 03 Jul 2006 13:32:56 +0000

Relatives can be a problem, too. My fiance co-signed a $55K student loan so his younger brother could go to a swanky culinary school in San Francisco. We then found him a great job and furnished an apartment for him in our city on the East Coast. Without warning, he quit the job, left the apartment and all our furniture a mess, owes the landlord back rent, and is back home with Mom (who also has crap credit) with no job and no prospects. He did leave evidence of many fresh store credit cards, though. He also failed to consolidate by the July 1 deadline, I’m sure. I think fiance can get off the loan in 2 years, but until then, we are SUNK. We also “loaned” this brother money for a laptop he had to have, wired him money on Thanksgiving and on and on. My advice: DON’T DO IT!!!!

By: Independent George

Independent George — Thu, 29 Jun 2006 13:17:36 +0000

Or, you can co-sign the loan on the condition that your friend sign another contract, whereby if he misses a rent payment he owes you… his soul!

It’s always good to have a couple extra souls tucked away somewhere. You never know when you’ll be struck by a mysterious voodoo curse. It’s just like life insurance.

By: John

John — Thu, 29 Jun 2006 08:13:27 +0000

My step-mother co-signed a loan. Though my credit rating was sound, I had no income due to a massive recession in my field. I have since re-financed her name off the lein and sent her flowers. She never paid a cent. If she ever needed me, I’d be there. But not only are we family, but we’re both financially saavy and responsible. Still, I wasn’t so sure I’d ever get a job. Extended unemployment can wear on ya. She had faith in me when I had lost it. Now I’m doing damn well. And I still own my home.

By: SkyeBlue

SkyeBlue — Wed, 28 Jun 2006 17:22:54 +0000

You are SO right about one of the reasons that a person might need a co-signer” on a loan is that the place where they are trying to get the loan from can see they are a bad credit risk. At the time they are asking you to co-sign for them most likely they have every intention of paying their payments on time, but unforseen circumstances happen. It could be a good way to ruin your friendship and credit rating all at the same time!

By: mapgirl

mapgirl — Wed, 28 Jun 2006 13:19:01 +0000

Short of roommates buying a place together, do people really do this?

I only know of two or three sets of friends who have done this, and it’s only ever been to buy a primary residence. Other than that, why would anyone yoke themselves like this?

Great post! It really highlights the credit risk you take by co-signing with someone who is less than creditworthy.