Cosigning a loan can be a helpful way to assist a friend or family member in securing financing. But what happens if you cosign a loan and the other person doesn’t pay?
Failing to pay a cosigned loan on time harms both parties. The lender reports late payments to credit bureaus, lowering both credit scores. The cosigner must cover missed payments and may face collection actions or legal consequences. This can damage relationships and impact future loan approvals.
With decades of experience helping individuals understand their financial obligations, I’ve seen firsthand how cosigning can lead to unexpected financial burdens. Let’s examine the risks, consequences, and steps you can take to protect yourself.
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