Co-signer for a Personal Loan - Avoid These Problems

When one is a co-signer for a very close person or a relative, it is a very kind offer as it shows that although they are entitled for the loan they are not chosen. So, we should not step down from being a co-signer when decided once. Now, the co-signers takes up the total charge of increasing his knowledge about how this process works and gives more stress to his importance to the loan, especially in case there is failure from the borrower.

Many of the co-signers are not aware that this loan will be revealed on their credit report. Hence they should remember that their loan requirements in future as well as the rate of interest on his own loans may be affected due to the co-signing on the personal loan, with which a calculation is made on his debt to income ratio It is better to make terms clear with a relative or friend, that they follow the rules of making timely payments and that he will repay the loan himself after a particular amount set. When the amount of money signed is more, the longer can one be a part of it.

 

It is necessary to set the loan in such a way that the co-signer can have a detailed report of the account information also as this loan can definitely or indefinitely affect the credit rating of the co-signer. By this he gets a clear idea of the repayments and the balance amount to be paid. There are times when the co-signers are unaware of the problems arised due to improper payment made by the borrower. So, it should be made sure that the lender informs him about this.

 

It is necessary to keep in mind that not only the credit but our relationship with our close friend or relative is also being maintained properly when co-signing a loan. It is money that brings bitter feelings in relations. So, it is necessary to find out the actual reason for the need of the loan, as otherwise he will be at a loss.

 

When you are aware that your own credit and finances cannot withstand if the borrower is not paying the loan in time, it is better that you do not take risks to co-sign for a personal loan, to your friends or relatives, as it may lead to more people coming to you for this favor and it is difficult to avoid them too.

 

You must not be convinced with the statement or cancelled cheques which the borrower provides you with instead you must insist him to get personal loan insurance which covers payment for a specified amount of time due to unemployment, sickness and death.

 

It is not a mere signature is something that is necessary for a personal, a clear history of the wealth of the co-signer is also taken into account, So it is necessary that the borrowers necessity for the loan is well surveyed, his lifestyle and way of expenditure are also to be well known. If it looks un-satisfactory we can very well reject to co-sign. If you are convinced and ready to sign, you should make sure that the lending party gives you a detailed report of the payment status on the personal loan.