What is the risk of Co-Signing for a Car Loan?

October 31st, 2009 by admin

After being rejected for several car loans, a friend has asked you to co-sign a loan. Before co-signing a loan there are several factors that you should consider. A co-signer is one who agrees to be responsible for repaying a loan if the borrower defaults.  By agreeing to co-sign a loan, you are usually responsible for late charges, penalties and legal fees associated with default.  In addition, a lender could sue or put a judgement against you, ask for a disclosure of your assets and force you to settle the debt by selling your property. In case of a default, your credit could be damaged, if you can’t repay the debt. Before co-signing, it is important to be sure that the person is responsible and can make the payments. Also before signing, be sure that you can pay off the debt in case of default.

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