- 1). Review your personal finances carefully to ensure you can afford the loan payment. You are responsible for the loan if the borrower defaults. Agree to co-sign a loan only if you're confident in your ability to make the payments if the primary borrower can't. Delinquent payments will lower your personal credit score.
- 2). Stay in contact with the lender. Talk to the lender beforehand, and ask the financial institution to contact you in writing or by telephone if the primary borrower misses payments or begins sending late payments.
- 3). Limit your liability on the loan. Defaulting on a loan can increase the financial obligation because lenders may charge additional interest and late fees. As a co-signer, negotiate with the lender and re-work the loan contract so that you're only responsible for the principal balance at the time of default and not the additional charges.
- 4). Get copies of the loan documentation. Ask the primary borrower to make copies of the loan paperwork for you. This way, you'll have information on the loan term, monthly payment, interest rate and payment date.
SHARE
