Many people experience consigning for the debt of another; it means they are legally responsible for taking care of the debtor’s issue. For example, you go to the bank and borrow the money then give some to your family relatives or close friends who are asking you to be their cosigned person. As a consequence, you agree to pay back the entire total of the money if the person you sign for does not pay anything. So I will help you understand why you should refuse to cosign.
4 Reasons Why You Should Refuse To Cosign
- Hurting your relationship with your closet friends or family members. I’d strongly recommend that you should not cosign no matter what. Monitoring or tracking the payments on time is not fun. If you find that someone has not paid on time, you are automatically responsible for the missing amount. For example, one of my adult sons kept asking me to cosign for his used car he always wanted. But, I did not know what cosigning was about until I took the personal finance course at my local church. I learned a lot of things about cosigning loans and other payments. I realized that cosigning for my adult son was a bad idea. Fortunately, my husband and I decided to say no. It is okay to say no to your adult child or your best friend, even though they can and will hate you no matter what. Consider your personal boundaries for yourself and others.
- The lender can point out to you first if the payments have not made on time. The lenders from any companies or banks can call you first if the signer has not paid on time. No matter how that happens, you are still obligated to pay the loans. That’s Y-I-K-E-S. For example, my good friend who co-signed for her best friend texted me; she sounded distraught. Her best friend stopped paying the mortgage loan, and the lender sued her for the balance first. She groaned, “Why is the lender suing me first? It does not make any sense; I am just the co-signer. Don’t they have to sue her first?” She was upset, and she felt betrayed when I gave a one ugly word answer, “no.” She was the reason her best friend got the mortgage loan in the first place. The lender does not care about her. That is true, the lender may sue her best friend, too, but the co-signer usually gets sued first as their credit is excellent, and they both are more likely to repay the debt. Always keep in mind to say “no” to the person asking, period.
- You can sue your signed person if the payments are not made on time, even though you are still sued. I hate to say that suing the third party can destroy your reputation and yourself as the result of that you and your friend (or family relative) can “break up” for foolish finance issue – forever or a while. I am aware of that suing the other is not part of the Christian ways. I am encouraging that you and your signed person need to discuss and make a deal with the missing payments together; you both need to work together to avoid suing each other. If a signed person escapes without agreeing, you can easily find his or her relatives for what happened.
- Your signed person takes advantage of you, will be happy; however, your reputation can be destroyed. Your innocent, kind-hearted signature might make the other person take advantage of you and become excited because you helped him or her out for good. Unfortunately, that excitement does not stay forever. Your reputation on your best credit history can be destroyed.
And, the Bible shows us the clear explanation about cosigning…
It’s poor judgment to guarantee another person’s debt
or put up security for a friend. (Proverbs 17:18, NLT)
The words “poor judgment” are literally translated “destitue of mind”! Today, many parents are very soft-heart, sweet, and spoiled people who help their children, are willing to cosign for them. Now, my husband Justen and I are not like that. We choose not to cosign for our adult sons; however, we are advising them to think practically and wisely about the plan of saving for the purchase of their first cars or houses and teach how to pay the bills such as cable.
If you have already cosigned with someone, I believe that the Bible helps you be wise with a good scripture. What you need to do for cosigning – Avoid this as you can!
My son, if you have put up security for your neighbor,
if you have shaken hands in pledge for a stranger,
you have been trapped by what you said,
ensnared by the words of your mouth.
So do this, my son, to free yourself,
since you have fallen into your neighbor’s hands:
Go—to the point of exhaustion—
and give your neighbor no rest!
Allow no sleep to your eyes,
no slumber to your eyelids.
Free yourself, like a gazelle from the hand of the hunter,
like a bird from the snare of the fowler. (Proverbs 6:1-5, NIV)
Absolutely spot on, No matter how good a relationship is now, even the best can go wrong.
I cosigned for two people in my life. Both times were a big mistake and I’m still feeling the pain today. My boss at the time told me the realest thing. “why would you cosign for someone who couldn’t originally make the payments to begin with?” To which, I had no good answer.
Interesting read! Thanks for posting. What would your advice be for someone looking for rent but hasn’t established credit, and is required to have a cosigner? Are there other avenues for that category?
Joyce Cortes Mackenroth
Find another place that will do it without a co-signer. Maybe rent a room in a house or stay home until you’ve established credit. A lot of places have a your job is your credit type of deal. Establishing credit is important so go to creditkarma.com and find a credit card and pay it monthly to start.