Banks or other financial institutions will request a loan be co-signed if the primary borrower has insufficient income to qualify for the loan, or has a limited credit history or poor credit rating. When you co-sign a loan, you’re promising to pay off the loan if the primary borrower isn’t able to. You also run the risk of a lower credit rating if the primary borrower is late in making the monthly loan payments.
If the primary borrower defaults in making the loan payments, the lender will pursue the co-signor for full recovery of the loan. If the co-signor is unable to pay the loan the lender will most likely pursue legal action, which will affect the co-signor’s credit rating.
As a general rule, an individual should never co-sign a loan unless they are prepared and financially capable of repaying the loan in full.
Co-signed loan got you financially tapped out?
If you have become responsible for the repayment of a loan you co-signed and are unable to maintain your own debt obligations plus repay the co-signed loan, contact us today. We’ll review your options and discuss the right debt restructuring plan for you.
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