Cosigning for your Kids? Know what you're getting into!
If your kids are growing up and reaching adulthood, they may need your signature to get approved for credit cards, lease agreements, and car loans. Before you co-sign for anyone for any reason, know what you are getting into.
If the primary accountholder defaults or is liable in any way on a contract or other debt instrument, the creditor can go after the co-signor personally as well. You should also understand that even co-signing for something will affect your credit rating whether the debt is delinquent or not.
According to the Federal Trade Commission, 3 out of 4 cosignors are asked to pay back debts for which they co-signed. Here are some tips to think about before co-signing a loan.
- If you are asked to co-sign for an apartment lease for which there will be other roomates, have the roomates parents co-sign as well.
- If you are asked to co-sign on a car loan, have your name included on the title. That way, if the payor on the loan defaults, you can sell the vehicle. (However, if your child has a "problem" driving history, this may not be a good option due to your potential liability in the event of your child's accident.)
- If you are asked to co-sign for a credit card, make sure the credit limits are low making you less exposed.
To learn more about this article, visit Should you cosign for your kid?.
If you have creditor-debtor questions, contact Wood, Atter & Wolf, P.A., a Jacksonville, Florida law firm
