In today’s difficult economy, it is harder than ever to qualify for a debt consolidation loan. To get a loan you must have sufficient income, and perhaps collateral. In many cases the lender will also ask you to have a co-signer.
A co-signer is someone with good credit who guarantees your loan. If you don’t pay the loan, your co-signer is liable. That means if you don’t pay, the co-signer is on the hook!
If a bank or other lender asks you to get a co-signer as a condition of giving you the loan, what should you do? Should you ask a friend or a family member to co-sign for you? If you lose your job and can’t repay the loan, and if the co-signer has to pay, how much damage will you do to your co-signer? In most cases it is not worth losing a friend by asking them to co-sign your loan. In most cases it is not worth putting your parents’ financial future at risk by asking them to co-sign your debt consolidation loan.
If you can’t qualify for the loan without a co-signer, your best option may be to say no to the loan. Look for other alternatives, such as credit counseling, a Chapter 13 Wage Earner Plan (for Americans) or a consumer proposal (for Canadians). If you can’t qualify for a debt consolidation loan without a co-signer, you should be looking for other alternatives. Don’t drag someone else down with you.
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