In a recent report from the consumer advocacy group, TakeChargeAmerica.org, the group warns co-signers there may be "no going back" once you pull the trigger on loan. TCA advises weighing all potential issues, including the health and potential for job loss of anyone for whom you co-sign a loan. Also note that if your co-signer skips a payment, late fees and penalties can accumulate -- and that you could be liable for paying them.
Have an exit strategy
If opting to co-sign a loan, make sure you understand the terms and what the process is for getting yourself removed from the loan, if need be. "Note that while some loans do allow you to remove yourself as a co-signer, this is usually a lengthy process and is not likely to happen unless you have been on the loan for a while and the borrower is making regular payments towards the loan," advises Tayne.
Make no mistake, agreeing to co-sign a loan is serious business -- one that puts your credit and your savings at risk. So go into such an agreement with your eyes wide open and with full due diligence regarding the ongoing financial health of your loan partner.
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