I Am Determined to Become a Cosigner
While I believe that biblical concepts and practical horse sense suggests strongly that you do not do so, and that cosigning anything is a huge mistake you most likely will regret, if you so insist, here are a few guidelines.
- Be aware that you are borrowing the money.
- Be sure you can afford to repay the loan.
- Before you pledge any of your personal assets to secure the loan, make sure you fully understand the potential consequences.
- Know that you are assuming full responsibility of the entire debt.
- Don’t be pressured into cosigning anything without first understanding the full scope of the paperwork.
- Negotiate all terms favorable to you before agreeing to sign.
- Ask for copies of all paperwork, including the loan contract, the Truth-in-Lending Disclosure Statement, and warranties and other important documents.
- Require the lender to provide you with written notification within two weeks if the borrower ever misses a payment or violates any other terms of the contract. Get this lending agreement in writing.
- Ask the lender to provide in writing all the extra costs to you should you end up paying the loan.
- If property is being purchase with the loan, be sure your name is listed on the deed of trust.
- If a vehicle is being purchased with the loan, be sure your name is also listed on the title.
- Be sure the asset is fully insured should something happen to it during the life of the loan. Be sure you obtain proof that the insurance premiums have been paid.
- Once you cosign a loan you are responsible for 100% of the entire loan (not just 50% of it).
- Beware of all the risks involved and take steps to minimize them.