The beauty of debt is, it gets you covered with the instant fund. There is a lot of advancement done in the financial market. Everything is now online and a lot better. If you need a loan instantly, you get it within few hours. Minimal documentation and online processing have made the experience a fulfilling one. For all the unplanned expenses, you have only one answer- A personal loan. An instant personal loan is very flexible and you can customize it according to your needs. Pretty much affordable and quick, you get funds without visiting the loan provider. However, things are easy and smooth when you have a good financial record. A good credit record with an impressive score is necessary to experience the benefits of a personal loan. When all the doors have closed, the last thing is getting a co-signer or a loan guarantor. To help a friend, if you are being a ci- signer it means you are paying someone else’s debt if he is not making the payment. The personal loan provider offers your friend a loan, only because you legally sign to pay off the loan if he doesn’t. Your friend or family, whoever you are helping is a risky candidate having a bad credit score. Are you willing to take all the risk? Before you go ahead, pay attention to all the aspects.
Who is a co-signer?
A loan is granted only when a person meets all the personal loan eligibility criteria. The normal and most common ones are credit score, income, age, background, and documents. If an individual is not meeting any of these and still needs a loan- he needs a co-signer. A co-signer will take care of his loan in his absence. If he is not able to pay the loan, as a co-signer you will have to pay. You are being a loan guarantor and if he becomes a default, you are responsible for the repayment. The loan is indirectly yours, and the responsibility is directly yours. You are likely to be a co-signer only if it is your family or friends. However this is very risky and you need to know every aspect before you sign.
Things to consider before you become a co-signer
Credit score will be impacted: Take an example; you become a co-signer of your friends that has just taken a loan. You helped him get a loan because he was not getting one. You got it because your score and background were good. Now, suppose he fails to pay an installment or an EMI, you cannot relax because it will affect your score directly. When you are co-signing the loan is directly on you too. So, if the first individual is failing to pay his EMI, your credit score will get impacted. What you will do is, ask him to pay on time or make the payment. If you feel that it is his personal loan only and his score will be affected, this is wrong. You are co-signing and taking equal responsibility, so your score gets impacted.
Level of debt increases
If you co-sign for a loan from your friend, your debt increases. The moment you co-sign, the debt gets added to your account too. Without enjoying the money, you will have debt liability with you. So if you were having an ongoing debt already, this will add on. Debt means a lot of burdens, and you keep adding on new burdens by co-signing a loan. It will be equal to you having a debt. In the future, when your banks will review your credit journey, this loan will be equally taken into consideration. If it was a bad experience, that will get reflected too. Your level of debt increases once you co-sign a loan for your friends or family.
Savings might suffer
If you are helping your friend or family, make sure they help you back. If they are not making an on-time payment, you need to suffer. The hard-earned money and you saved with difficulty, suffers too. If your friend is not being able to pay the entire amount of the loan, you will have to pay even if you don’t like it. It is because the loan provider will find you, and make sure you pay.
Repayment responsibility
If your friend or family defaults, you will have to take up the repayment responsibility. It will be on you completely to finish off the debt within the said tenure. What can be more hurdle than paying someone else’s debt? The idea is, if you are being a co-signer; make sure it is worth it.
Wrapping up
Co-signing is a great responsibility. Considering the factors above you need to make the right decision. You can surely help someone get an instant personal loan if he doesn’t meet the personal loan eligibility, but be careful. It should not come on you and destroy the relationship and money what you have built for years.
