Would You Cosign A Loan For A Friend?

Cosigning for a friend seems like such a nice thing to do for someone. I mean who doesn’t want to help out a friend in need, plus people who need a cosigner always have a great story to why you should cosign for them.

I remember when I use to be a lender at a bank, I would come across so many individuals who should have never cosigned for someone. Some were not aware that cosigning meant they were on the hook for the loan, while others just never quite understood why their FICO score was so low because of someone else’s mistakes. Not reading the fine print when obtaining anything is just a bad idea because you always get blind sided which sucks!

I use to come across so many people who regretted cosigning for their friend or family member, simply because it prevented them from getting credit or in some cases completely destroyed their credit.

One story that I can’t seem to forget was the time when a father wanted to cosign for his daughter to get a student loan to attend university. They were both so excited that she had gotten into the school of her choice. Heck I was excited for the both of them, until I pulled the father’s credit bureau and noticed he had a car loan in arrears. He was completely surprised and thought there may have been a mistake on his credit bureau. He then realized that he cosigned for is brother to get a car a few years prior. Unfortunately I had to decline him. He and his daughter were both devastated. 

I wouldn’t recommend anyone cosign for anyone under any circumstances. If it wasn’t for my experience as a lender, I probably would have cosigned for a friend or two over the years. But after seeing many peoples lives ruined because of cosigning, I will just have to pass? What really sealed the deal for me is when I discovered Proverbs 17:18 that says it’s poor judgment to guarantee another person’s debt or put up security for a friend. I was blown away when I read this for the first time. Even God thinks it’s dumb to cosign, so why the heck would I bother.

I also realized while working at the bank that the only reasons why they want a cosigner is because they don’t trust that the borrower will pay them back. Banks are extremely intelligent and have developed systems to weed out the higher risk customers that are unlikely to pay. So why on earth would I trust even a friend or family financially over the bank. They only want a cosigner so they have someone they can trust to go after if the borrower doesn’t pay them back. Once I realized this it made it much easier to say no!

Have you or would you ever cosign for someone?

31 comments

  1. gregjohnson975182420 says:

    Absolutely not. Way too many friendships have been ruined over financial matters. I would loan a friend money, but I would not cosign for a loan!

  2. bogofdebt says:

    I haven't but I'm not in the area of my life where I would even be able to. However, I don't think I would–I dislike even loaning money to people as I've been burnt on that several times.

  3. Craig Arthur says:

    I recently told my parents that I would not cosign a loan for them. I gave them multiple reasons but they still go mad at me. Can you believe this?

  4. Madison says:

    I haven't cosigned for anyone and I won't. Most of my family is terrible with money, are always changing jobs after just a few months, and can not handle any sort of major responsibility. There is no way I'm risking myself to help them with getting a loan. And if I feel that way about family, there's no way I'd do for anyone else either. It's just not going to happen. There's a reason why the banks require them to have a cosigner. That should be a red flag right there!

    Did you ever explain to the cosigner what would happen if the person taking out the loan failed to pay it? And if so did any change their minds?

  5. Kim says:

    Absolutely not! My former boss cosigned for a loan so his son could go to school. Without his knowledge, his son stopped paying the loan and he had no idea until he tried to refinance his home and his credit score was in the 600's!

  6. Edward says:

    In theory, I would depending on the person. In practice, however, my credit score is already so low from my own mistakes that if somebody was coming to me to cosign, they'd be REALLY bad with credit.

  7. Brian says:

    My dad co-signed a motorcycle loan for me, because I wasn't sure I would qualify on my own for the better interest rate (turns out I would have), but I still made all the payments. Personally, I think the only way I would co-sign a loan was if I was willing to make the payments for the other person (and it would probably have to be my child to help them build up their credit history). I definitely would not co-sign for a student loan, those things are impossible to get rid of!

  8. Michelle says:

    I never would, I feel like you're just asking for problems.

  9. Nick says:

    I'm with most people when I say I never would. If they were close, I would offer to actually help them if they agreed to go through financial bootcamp under my (untrained) supervision and by help them I would make clear that I would not be cosigning, giving or lending them money but helping them get to the point where they were in control of their life and budget. That offer, for sure, would probably quickly be rejected – confirming that it would be a dumb idea to get into financial bed with them….

  10. SB @ OCAAT says:

    nope, never. I am ruthless on financial matters

  11. […] Call Me What You Want Even Cheap asks “Would You Cosign a Loan for a Friend?” […]

  12. thefrugaltoad says:

    Nope. Would never co-sign a loan, not even for my kids. I would however help them out with the down payment. They need to learn manage their finances on their own and if someone is always bailing them out they never will!

  13. Co signing says:

    […] in the right sidebar. Thanks for visiting! This is a follow up to the recent article I wrote on cosigning for a friend.  I am definitely against cosigning for friends, but what about cosigning for your kids. I mean […]

  14. […] @ Call Me What You Want, Even Cheap writes Would You Cosign A Loan For A Friend? – Cosigning for a friend seems like such a nice thing to do for someone. I mean who doesn’t […]

  15. check processing says:

    Can't accept!!! I have a friend named Rana and he borrowed money from me for 1 year above but still now he didn't call me by the by if I call him he says, just wait someday I'll give full money friends. You know I just punished. So!!!!!!!!!!!!!
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  18. Richard59 says:

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  19. Cosign is not really recommend for any individuals but if a friend really needs help especially if they need to renovate their home, It is really up to you.

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  25. if u use to come across so many people who regretted cosigning for their friend or family member, simply because it prevented them from getting credit or in some cases completely destroyed their credit.

  26. adam says:

    It's just not going to happen. There's a reason why the banks require them to have a cosigner. That should be a red flag right there no credit check loans

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