When you ask someone to cosign a loan with you, are you aware of how much you're really asking of them? Conversely, if you're the one being approached to cosign a loan with another, are you both aware of the full range of contingencies? Whether you're a student looking for help from a parent, a parent trying assist your child, or just trying to support a friend, you'll want to ensure that you both know where you stand before you come to any firm conclusions, and discuss how you'll handle repayment. Cosigning a loan is one of the most powerful ways to show not only that you care for someone, but that you firmly believe in their future potential to stand tall financially. Make sure that you protect your investment, since especially over the term of an extended repayment period, instabilities can develop that may threaten your own plans.
Cosigning a loan for someone is a method that helps many reach to achieve higher education or become a first-time homeowner. Before you discuss how you'll handle your response to this big question, review our infographic to help jump-start your research and to help identify the kinds of questions you'll want to make sure you answer together. Sometimes we all need a little help. Just make sure you connect early to know where you stand if things take an unexpected turn after you both sign on the dotted line.
Editorial Disclaimer: Opinions expressed here are author's alone, not those of any bank, credit card issuer or other company, and have not been reviewed, approved or otherwise endorsed by any of these entities. All information, including rates and fees, are accurate as of the date of publication.
This article was originally published on August 5, 2015, and has been updated.