VipCredit.com   Home    The Bad Credit Headquarters™      Personal Loans   Guaranteed VISA   Refinance Loan   Mortgage Loan   Auto Loan   Credit Repair    Quick $500-$1000     Canadians    Credit Report    Contact Us      Debt Reduction Plan      How to Stop Credit Harassment

Cosigning A Loan

You may land up in a situation when a friend or relative approaches you to cosign a loan. If you are aware of the consequences, you will be wise enough to sort out certain things before cosigning. If you are not aware of the consequences and the risks that you will be taking, we will let you know about that.

Guaranteeing a debt
Remember, if you are cosigning a loan, you are guaranteeing a loan. If the borrower fails to make payments, then you will be asked to return the loan. So, make sure that you will be able to repay the loan, if the lender approaches you to make full payments.

Payments and other fees
If the borrower is unable to make any payment to the lender, then you can be asked to make full payments on the behalf of borrower because you have cosigned the loan. This may also include other penalties and fees like late fees or collection costs.

What happens if you do not pay?
If you refuse to return the loan, you may have to the face legal action that can be taken against you by the lender. He can sue you or garnish your wages. Most critically, such actions by the lender can seriously damage your credit report also, which may act as an obstacle if you want to get a loan for yourself.

Chances of paying
Certain researches and studies have concluded that three-fourths of cosigners have to pay the loan if the borrowers fail to do so. If you trust this number, then make sure that you have enough money to repay the loan. Also remember that the lender can also directly approach you without going to the borrower.

Checklist
You should be aware of what things to take care of when you cosign a loan.

• Make sure that you can afford the loan.
• If it is a secured loan that you are cosigning, then you might have pledge your home or car. You should be aware of the terms and conditions, as you do not want to lose your property.
• Sign a deal with the lender which says that you will responsible for paying only the principal amount and not other fees and penalties.
• You may also request the lender to notify you in advance if the payment is defaulted.