Cosigning a loan for a friend or relative

Cosigning is a bad idea and should be avoided. Think about it. Why does the bank want a cosigner for a loan? The reason is simple. They don’t expect the person taking out the loan to repay it. If you cosign for a loan, and the person that took out the loan does not repay the loan, you are legally responsible and required to pay it.

I know it seems like you are helping someone by cosigning a loan but you are not.

Proverbs 17:18 says:

A man lacking in sense pledges And becomes guarantor in the presence of his neighbor.

This is a nice way of saying you did something stupid! Parents often do this for their children so they can get a car. If you love your parents and respect them, please do not ask them to cosign a loan for you. Don’t even go there.

I have to say, with all the dumb stuff I personally have done with money over the years, this is one mistake I can say that I have avoided personally.