Check out the Black Enterprise.com article below featuring advice from yours truly (ME) on this subject!
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When friends and family ask you to co-sign on a loan you might think you’re doing them a favor, but you’re actually entering into some risky business.
Think seriously before signing on the dotted line (Image: Thinkstock)
According to the Federal Trade Commission, “Of the co-signed loans that default – 75% of them have to be repaid by the cosigner.” What that means is that if you decide to co-sign on a loan for someone, there is a three out of four chance that YOU will end up paying back the loan and NOT the borrower.
So, what should you do if someone asks you to co-sign on a loan? Dorethia Conner, owner of Conner Coaching, which offers personal and business financial coaching, cautions, “Don’t do it!” There is some questionable financial misinformation out there about co-signing so Conner spoke with BlackEnterprise.com to help bring some clarity to the issue and answer some key questions.
What does it mean to co-sign?
When somebody co-signs on a loan they are legally agreeing to make the payments (including late fees and attorney fees) should the loan go into default. It’s a legally binding document; that’s why it’s so hard to get out of explains Conner. Please understand that co-signing is not a reference, a favor, and you are not just a back up; you are legally responsible. Bottom Line: Read More
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