Does a family member or friend want you to cosign a loan for something? Perhaps a house, a car, or a business loan? Is it a good idea to cosign a loan for them? After all, they seem like responsible individuals, right? Here are a few things to consider before you sign on the dotted line . . . .
1. The lender wants you to cosign for a reason.
If the lender is requiring the potential borrower to find a cosigner, that means that the lender doesn’t trust the borrower to repay the loan according to their terms. That should worry you as a cosigner.
After all, the lender probably has been in the lending business for some time, and has a pretty good idea of who will pay up when the bills come due. If they’re saying that this individual is unlikely to pay, that means you’re likely to be stuck with the bill if you cosigned for the loan.
Talk about a sticky situation! Imagine if you cosign for your loved one, they can’t pay the bill (they probably won’t be able to), and then you are stuck with the bill? What if your loved one gets embarrassed that you are having to pay their bills and never talks with you again?
2. The Bible has something to say about cosigning.
I’ll let the the book of Proverbs speak for itself:
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. – Proverbs 6:1-2 NIV
Whoever puts up security for a stranger will surely suffer, but whoever refuses to shake hands in pledge is safe. – Proverbs 11:15 NIV
One who has no sense shakes hands in pledge and puts up security for a neighbor. – Proverbs 17:18 NIV
Do not be one who shakes hands in pledge or puts up security for debts; if you lack the means to pay, your very bed will be snatched from under you. – Proverbs 22:26-27 NIV
Have you cosigned a loan? How did it work out? What are your thoughts? Leave a comment below!