Cosigning a Loan

by larry on January 29, 2011

In this episode of Money Chat Today, Larry Steinhouse and Rick Lee are discussing co-signing loans for friends and family.

Rick and Larry discuss the pitfalls of co-signing a loan after Larry asks Rick to co-sign a car loan.  Rick tells the story about how he lost $30,000 when he co-signed a loan for a friend. The reasons this happens and how to avoid them are also discussed.  Larry adds advice on how to co-sign a loan for your children and avoid problems.

This is a powerful episode that could save a friendship or any other relationship.

Some important highlights of this video:

  • If you Co-sign a loan, YOU are financially responsible for the entire loan.
  • You do not get a bill; your friend does.
  • You do not know if the loan is delinquent until you get a letter or phone call from the bank saying so
  • IF your friend isn’t credit worthy to a bank, that should be a signal to you
  • Your credit score may  go down even if your friend pays on time.
  • Even with a repossession, you still may be responsible for the  entire debt.
  • Emily Peter’s horror story and blog.
  • Federal Trade Commission on Co-Signing a loan

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 Cosigning a Loan
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  • http://www.netfluence.com Chris Moos

    Nice to see Larry and Rick back again with this week’s advice. Good stuff guys. Thanks for another great talk about sensible money management.

  • Marty

    Good job on co-signing topic. As Larry mentioned, I have had several real estate clients over the years, who were not aware that the loan or lease that they co-signed, became part of their credit record.

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