Don’t Co-Sign Anything for Anyone

Have you ever co-signed on a loan for someone before? If so, how did it work out? I have had many friends that co-signed loans from student loans to personal loans for their kids, relatives or friends and some of those loans they ended up having to pay them off. I co-signed on a couple of loans and they both worked out but at times I lost sleep worrying about getting stuck paying for them. I tell myself I won’t put our family in that position again.

We have told the boys many times that we won’t co-sign on any student loans or personal loans for them. We love them all but we don’t want to be on the hook for the loans. Also, we want them to learn to only count on themselves and to save up the money before buying something so they don’t need to get any loans.

You may think I am crazy but it is possible. We all have many choices in life and we can put off things till we can afford them. I know our society pushes us to borrow money and enjoy things today. That is why so many people are in debt in the United States.

Store Credit Cards

We walked in Kohls department store on Thanksgiving night when Logan wanted to buy a Nintendo Switch and right in the front door, we were stopped by a Kohls employee who had a clip board. She asked if we had a Kohls Credit Card. Of course, she had a sales pitch on the values of having a Kohls Credit Card but not the negative things like high interest rates and being in debt. In the last month I have been asked at many places like Home Depot, Target, Wal-Mart and more. Think of all the places you shop that ask you to open up a credit card.

We told the boys if they ever want to co-sign on a loan, they need to be prepared to take over the loan if the person decides not to pay on the loan anymore.

Student Loans

Student loans seem to be a killer for some of my friends. I have heard the same story so many times just with different names. The parent co-signs on their kid’s student loans and then the kid drops out of school before getting a college degree. Then the kids can’t seem to make enough money to pay on the student loans or they just don’t feel it is important enough to pay on them. Probably some of them feel like they are entitled to having their parents pay off the loans.

We hope our kids never feel they are entitled to anything. We want them to go out into the world, follow their passions and work harder than anyone else. We want them to live within their means and set themselves up to have Financial Freedom. With Financial Freedom they will have choices later in life and a lot less stress than having debt or little savings.

Car Loans

Some of the people that are paying on their kid’s student loans, car loans or personal loans have no plans on retiring. They are in their fifties to seventies of age with little savings and the debt from what they co-signed for their kids. I feel sorry for them. What lessons did they teach their kids about money? Parents need to take care of their own Financial plans before helping anyone else out.

When I was on line recently I found some info on this topic. First was written by Sienna Kossman on June 6, 2016. The link to her article is below in the show notes. Her research and statistics Poll; 4 in 10 co-signers lose money. Poll found 1 in 6 U.S. Adults say they so-signed a loan or credit card for someone. There survey showed negative results from co-signing loans that gone wrong.

  1.  had to pay some or all of the money owed.
  2. Credit Damage – 28% had a drop in their credit scores.
  3. Hurt Relationships – 26% had damaged relationships.

The second info I found was from They Listed 10 reasons why not to Cosign on a loan. The rough list of the 10 reasons they listed are:

  1. Cosigning a loan is high risk, low reward,
  2. The lender will Sue you first if payments are not made.
  3. The person you help will be happy, but you have a lot to lost. Damon Duncan a bankruptcy attorney in North Carolina says “As a bankruptcy Attorney, I have seen people driven to file for bankruptcy due to cosigning on a loan.”
  4. Cosigning a loan can destroy friendships and families.
  5. You are 100% liable on a loan that could be a significant amount.
  6. You could face tax consequences from cosigning a loan if the debt is settled.
  7. Cosigning could make approval on a loan you might need impossible.
  8. You’ll be making that payment if your cosigner defaults.
  9. You may need to sue the other responsible party if payments are not made and you get sued.
  10. You have to be organized enough to keep track of the payments when cosigning a loan.

Wow. Those to me are great reasons why not to cosign on any loan for anyone to me. To much risk for me and I hope my kids won’t ever cosign on a loan during their lifetime.

There are tons of sad stories that can pull at your heart strings. It can make you feel so sorry for them and want to help them out so they are less stressed. But maybe you would help them out more by not co-signing the loans for them.

They have choices like:

  1. If they need you to co-sign on a loan to buy a car, they can save for one and use public transportation, a ride service like uber or lyft. They could also ride a bike or walk to work which could help their health out also.
  2. If they need you to so-sign on student loans they could save up the money before going. They could work for a company that would pay for the school. They could go part-time if they don’t have them money for full-time. There is no time line to get a degree. They could go to a Community College or State School to save money also. If they are nice to their parents they could live at home if the parents let them while they are in college.
  3. If they want you to co-sign on a personal loan or a credit card just run. LOL, they need to save up money instead of buying something they think they need, which is probably a want. If they really need it, they could shop for a used one or find a place that rents them. If it is for a computer they could go to the library and use theirs for free.
  4. If they want you to co-sign on a house, they want to buy they could rent till they have enough money to put down on the house to where they don’t need a co-signer. They could do a rent to own property where part of the rent goes towards buying the house from the owner at a later date at an agreed-on price. Or they could just rent till they have money saved to pay cash. They don’t need a big house if they don’t have cash. A big house is larger repairs, expenses and utilities. Plus, a larger house takes more furniture to fill it up.

What are your thoughts? Tell me your story or someone you know. We hope our kids have learned from the lessons we taught them at home. Too bad schools don’t cover this with our kids.

Positive Quotes

“The inner speech, your thoughts, can cause you to be rich or poor, loved or unloved, happy or unhappy, attractive or unattractive, powerful or weak.” By Ralph Charell

“Take Action! An inch of movement will bring you closer to your goals than a mile of intention.” By Dr. Steve Maraboli

“The Future Depends on What You Do Today.” Gandhi

More Positive Quotes

Here are two positive quotes I like; “There is no way to happiness; happiness is the Path.” By Buddha

“The best way to predict the future is to create it.” By Peter Drucker

“Change Your Thoughts – Change Your Life” by Wayne W. Dyer

Let me know your thoughts about this blog and let me know of others you would like me to do in the future. I feel we can all learn from each other. That is why I am in the helping people retire early, enjoy life more and be more successful. Also, please see my Disclaimer page.

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3 thoughts on “Don’t Co-Sign Anything for Anyone”

  1. *Can I just say what a relief to find someone who actually knows what theyre talking about on the internet. You definitely know how to bring an issue to light and make it important. More people need to read this and understand this side of the story. I cant believe youre not more popular because you definitely have the gift.

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