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Heads up on co-signing loans |
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Submitted by Kathleen Green
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In my opinion, if you co-sign a loan with a family member or a friend, you’re looking for trouble. Granted, if you want to help your child buy his first car, you may need to co-sign because the child does not have credit history yet. The danger is that if your son makes a late payment, the bank will come to you to pay it off. Be extremely judicious who you co-sign for. Because of the risk that another person could damage my credit, I will never co-sign for a friend or family.
It’s not homework, it’s an assignment
Outline the following; read these documents and understand every clause. There’s good and bad risk. Make sure you have the skill set to take a calculated risk?
1. home mortgage(s)
2. credit card agreements and statements
3. car loans or leases
4. insurance contracts
Get answers to these questions:
Do I understand the rules of this contract?
Do I understand the amount of risk I’m taking by agreeing to this contract?
Do I understand tax laws surrounding the contract?
Does the contract fit my priorities? Forget whether you think you deserve it (because you probably do)—can you afford it?
Can I afford to lose all or part of my money by engaging in this contract?
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