Welcome, visitor! [ Login

Premium WordPress Themes - AppThemes

Co-Signing A Loan

Loan Lenders- Loan advices April 19, 2017

Co-Signing A Loan

Fast Facts

  • You are being asked to guarantee someone else’s debt when you co-sign a loan.
  • If you co-sign and the borrower misses a payment, the lender can collect from you immediately. If the borrower defaults on the loan, you will have to pay the remaining balance. You also may have to pay such charges as late fees, attorney’s fees, or other court costs.
  • If you are considering co-signing, be sure you can afford to pay the loan.
  • Your liability for the loan may keep you from getting other credit you may want. The amount of the co-signed loans will be considered a debt on your record when you apply for a loan.
  • Before you pledge property, such as a car, to secure the loan, make sure you understand the consequences. If the borrower defaults, you could lose your property.
  • Understand that by co-signing, you will not receive benefits from the loan.

Co-signer’s Notice

What would you do if a friend or relative asked you to co-sign a loan? Before you give your answer, make sure you understand what co-signing involves. Under a Federal Trade Commission rule, creditors are required to give you a notice to help explain your obligations. The co-signer’s notice says:

“You are being asked to guarantee this debt. Think carefully before you do. If the borrower doesn’t pay the debt, you will have to. Be sure you can afford to pay if you have to, and that you want to accept this responsibility.

“You may have to pay up to the full amount of the debt if the borrower does not pay. You may also have to pay late fees or collection costs, which increase this amount.

” The creditor can use the same collection methods against you that can be used against the borrower, such as suing you, garnishing your wages, etc. If this debt is ever in default, that fact may become a part of your credit record.”

This notice is not the contract that makes you liable for the debt.

Co-signers Often Pay

Some studies of certain types of lenders show that for co-signed loans that go into default, as many as three out of four co-signers are asked to repay the loan. That statistic should not surprise you. When you are asked to co-sign, you are being asked to take a risk that a professional lender will not take. The lender would not require a co-signer if the borrower met the lender’s criteria for making a loan.

In most states, if you do co-sign and your friend or relative misses a payment, the lender can collect from you immediately without pursuing the borrower first. And the amount you owe may be increased — by late charges or by attorneys’ fees — if the lender decides to sue to collect. If the lender wins the case, he or she may be able to take your wages and property.

There may be times when you decide to co-sign despite the risks. Perhaps your son or daughter needs a first loan, or a close friend needs help.

Here are a few things to consider before you co-sign:

  • Be sure you can afford to pay the loan. If you are asked to pay and cannot, you could be sued or your credit rating could be damaged.
  • Before you co-sign a loan, consider that even if you are not asked to repay the debt, your liability for this loan may keep you from getting other credit you may want.
  • Before you pledge property, such as your automobile or furniture, to secure the loan, make sure you understand the consequences. If the borrower defaults, you could lose these possessions.
  • You may want to ask the lender to calculate the specific amount of money you might owe. The lender does not have to do this, but some will if asked. You also may be able to negotiate the specific terms of your obligation. For example, you might want to have your liability limited to paying the principal balance on the loan, but not late charges, court costs, or attorneys’ fees. In this case, ask the lender to include a statement in the contract like this: “The co-signer will be responsible only for the principal balance on this loan at the time of default.”
  • You may want to ask the lender to agree, in writing, to notify you if the borrower misses a payment. In this way, you will have time to deal with the problem or make back payments without having to repay the whole amount immediately.
  • Make sure you get copies of all important papers, such as the loan contract, the Truth-in-Lending Disclosure Statement, and any warranties if you are co-signing for a purchase. You may need these if there is a dispute between the borrower and the seller. Because the lender is not required to give you these papers, you may have to get copies from the borrower.

2 total views, 1 today

  

  • Mortage Loan Lender-Texas-30

    by on June 9, 2017 - 0 Comments

    PEIRSON AND PATTERSON WILLIAM H PEIRSON 4400 ALPHA ROAD DALLAS, TX  75211-4593 Phone: (214) 392-7770   PEOPLES NATIONAL BANK FHA MORTGAGE DEPARTMENT 35 SOUTH PLAZA PARIS, TX  75460 Phone: (903) 785-1000   PERCY WILSON FINANCIAL CORP 5177 RICHMOND SUITE #1100 HOUSTON, TX  77056 Phone: (713) 850-7272   PILGRIM BANK FHA MORTGAGE DEPARTMENT 237 JEFFERSON ST […]

  • Mortgage loan Lenders -Massachusetts-M

    by on August 23, 2016 - 0 Comments

    MARATHON MORTGAGE COMPANY FHA MORTGAGE DEPARTMENT 77 WEST MAIN STREET STE 209 HOPKINTON, MA  01748 Phone: (508) 435-0033 MARITIME MORTGAGE CORP 4 CABOT PLACE STOUGHTON, MA  02072 Phone: (800) 733-7077 MASSACHUSETTS BAY MORTGAGE COR FHA MORTGAGE DEPARTMENT 95 TORREY STREET BROCKTON, MA  02301 Phone: (508) 584-2210 MASSACHUSETTS CAPITAL MORTGAGE FHA MORTGAGE DEPARTMENT 75 MCNEIL WAY […]

  • Truth in Lending Act

    by on September 18, 2016 - 0 Comments

    Truth in Lending Act Annual Percentage RateThe cost of your credit as a yearly rate. A% Finance ChargeThe dollar amount the credit will cost you. $B Amount FinancedThe amount of credit provided to you on your behalf. $C Total of PaymentsThe amount you will have paid after you have made all payments as scheduled. $D […]

  • Maximum Loan Limits for Loans Originated in Fiscal Year 2011-Arizona

    by on June 25, 2017 - 0 Comments

    Fannie Mae and Freddie Mac Maximum Loan Limits for Loans Originated in Fiscal Year 2011 (10/1/2010-9/30/2011) These limits were determined under Public Law Number 111-242, which sets maximum loan limits equal to the higher of the maximum limits determined under the Economic Stimulus Act of 2008 and the Housing and Economic Recovery Act of 2008. […]

  • Mortgage loan Lenders -Nevada- A to E

    by on June 25, 2016 - 0 Comments

    ACCREDITED MORTGAGE CORP FHA MORTGAGE DEPARTMENT ONE TRAFALGAR SQUARE NASHUA, NH  03063 Phone: (603) 881-8885 AMERICAN HERITAGE MTG CORP FHA MORTGAGE DEPARTMENT 74 NORTHEASTERN BLVD STE 18B NASHUA, NH  03062 Phone: (603) 880-9797 AWANE BANK FSB FHA MORTGAGE DEPARTMENT 1 JAFFREY ROAD PETERBOROUGH, NH  03458 Phone: (603) 924-9654 BEACON MORTGAGE COMPANY LLC FHA MORTGAGE DEPARTMENT […]