Before you co-sign a loan for that friend or family member, it’s a really good idea to think twice. There is a reason the bank needs your signature. The people who work with money every day and earn money from loaning it out think that this person is risky for a reason. No matter how much you love them, that is the case! So ask yourself:
- Will I still be able to love this person if they walk off with all the money and I get all the debt?
- Are you ok if your ability to take out loans in the future is impacted?
- Are you able to forgive that person if you have to bail them out of the whole amount?
Ask the other person:
- Do you have any other debts at all?
- Why have the bank said they will not give you this loan?
- What will happen if you cannot pay and I have to? Will you then pay me? How?
I never recommend that someone co-signs for another, and the Bible says it is a foolish idea (Proverbs 22.26), but at the very least do not do it unless you ask some questions.