Cosigning a loan is a terrible, terrible idea, especially for a friend or family member. Really, it’s just the worst idea, no matter how much you want to help out.
Cosigning a loan means that you’re agreeing to take equal responsibility for paying back the loan on time, and if your family member, friend, or whomever can’t make the payments on time it becomes your responsibility. A survey by a credit card marketplace online found that 38 percent, so about two out of every five people that cosign a loan, eventually find themselves on the hook for that money. A quarter of people that cosigned loans eventually had their credit hurt too.
That’s a lot of people that are affected by just cosigning a loan for someone else, and that was just the financial side of things. It can seriously damage the relationship with the person that you’re trying to help. The same survey said that 26% of cosigners had their relationships damaged by cosigning the loan.
Really, please reconsider before you co-sign a loan for anyone, but especially a friend or a family member. It’s almost never a good idea.