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Difference between revisions of "Co-Signing or Guaranteeing a Loan"
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Co-Signing or Guaranteeing a Loan (view source)
Revision as of 17:46, 19 December 2014
, 17:46, 19 December 2014→Why does the lender require a co-signer or guarantor?
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Sometimes it's necessary or helpful to co-sign or guarantee a loan. It may be a sound business deal, or it may help a family member. But before you agree to put yourself at risk, look at the situation carefully. Ask questions like: | Sometimes it's necessary or helpful to co-sign or guarantee a loan. It may be a sound business deal, or it may help a family member. But before you agree to put yourself at risk, look at the situation carefully. Ask questions like: | ||
*Why does the lender require a co-signer or guarantor? | |||
How high is the risk that the borrower will have trouble and you’ll have to pay the loan? | How high is the risk that the borrower will have trouble and you’ll have to pay the loan? | ||
What will happen if you don't sign? | *What will happen if you don't sign? | ||
Most importantly, can you afford to pay off the loan if the borrower can’t? | *Most importantly, can you afford to pay off the loan if the borrower can’t? | ||
If you’re not sure about your responsibility, or about anything else in the loan contract, get advice from a lawyer. If you decide to co-sign or guarantee a loan, ask the lender in writing to keep you informed in writing of all activity on the loan. This can help you see a problem developing and correct it before it’s too late. You should also insist on a copy of every document you sign. | If you’re not sure about your responsibility, or about anything else in the loan contract, get advice from a lawyer. If you decide to co-sign or guarantee a loan, ask the lender in writing to keep you informed in writing of all activity on the loan. This can help you see a problem developing and correct it before it’s too late. You should also insist on a copy of every document you sign. | ||