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Co-signing a loan is a legal and financial obligation to repay the full loan amount in case the primary loan applicant is unable to make payments. Co-signers are often required if the primary applicant does not meet loan requirements for income, has a high debt-to-income (DTI) ratio, or possesses a low credit rating. In these cases, the co-signer is hopefully a stronger applicant capable of guaranteeing loan repayment.
By co-signing any loan the co-signer agrees to be completely responsible for paying the loan if the primary borrower stops making the payments. If the primary borrower defaults on the loan both your credit records will be affected. The loan will be listed as your loan at the credit reporting agencies. Do not co-sign unless you can afford to pay back the loan.
Tip: do not co-sign a loan unless you trust the applicant completely - relationships change, so co-signing for boy/girlfriends is not recommended.
What else can I help you with?
How does cosigning for an auto loan affect your ability to get your own auto loan?
Never cosign a loan. While I agree that one should NOT cosign. cosigning can hurt or help. Remember that if they do not pay you have to. Cosigning will affect your credit and count towards your debt to income ratio and show as an open joint auto loan. You might be turned down to get your own auto loan without a cosigner if you cosign.
Does cosigning on a loan affect the cosigner's purchasing power?
Yes since it will show up on your credit record as your debt. You are fully responsible for any loan that you co-sign.
How does cosigning for a car loan affect your credit?
No.
How can someone be released from cosigning a mortgage loan without ruining their credit?
The only way to be removed from the obligation of cosigner is for the loan to be refinanced.
What are the benefits of cosigning?
A cosigner basically is a guarantor for the repayment of a loan or value and serves as cosigner of the debt. If the debtor fails to make payments or defaults, the cosigner is obligated to pay off the debt. No benefits for the cosigner, but cosigner benefits the debtor.
If you co-sign on an auto loan are you required to be on the title in Pennsylvania?
No, a cosigner generally has no legal rights to the property that they are cosigning for.
Will cosigning a loan effect your ability to get a loan?
Yes, it will affect your debt to income ratio.
After cosigning on an auto loan and that car is traded in are you still the cosigner on the new vehicle?
No. You are only cosigner on the one vehicle you signed for. All bets are off once the car is traded.
Does cosigning a loan go on your credit report if the loan is in good standing?
Your cosigner's credit report should also reflect the loan. In this case, it should show as paid on time as agreed.
Does your bad credit rating affect your children if they want a loan?
only if your cosigning
Can the primary borrower be sued by the cosigner if a loan is in default and the lender sues the cosigner?
Yes. But for now the lender has you and will get their money from you as they would the primary borrower. Cosigning is a really, really bad idea. At least for the cosigner. Everyone else seems to benefit.
How can you be a cosigner if the title is in the name of the person you cosigned for?
Many people cosign a loan for property they don't own. Many are uninformed of the consequences of cosigning. They don't realize they are agreeing to be completely responsible for a loan for property that belongs to someone else. If the primary borrower defaults on the loan and the cosigner must make the payments, the cosigner has no automatic right to the property.
