What To Expect If You Cosign

Show Notes

We often receive questions like this one: “I’ve cosigned on a car loan for my nephew and he’s not making the payments. What can I do?”

It’s sad because the only reason someone would cosign a loan is to help someone else. And far too often, it doesn’t end well. At least one survey shows that if you cosign, you have a 40% chance of having to pay the loan yourself because the primary signer either can’t or won’t make the payments.

And if that’s not bad enough, it’s usually a family member or friend who’ll leave you holding the bag, damaging your relationship as well your finances.

Now, the best way to keep that from happening is to simply not do it. Remember the Ben Franklin quote, “An ounce of prevention is worth a pound of cure?” He was actually talking about fire safety at the time, but the concept certainly applies to co-signing today, which could “burn down” your finances. The best way to get out of it is to never get into it.

By the way, it seems Mr. Franklin actually borrowed that “ounce of prevention” idea from Proverbs 22:30 which reads, “The prudent see danger and take refuge, but the simple keep going and pay the penalty.”

The Bible actually has a lot to say specifically about cosigning — and for good reason. Christians are often confused about cosigning. The Bible tells us to care for our family and neighbors and to help those who can’t help themselves. Wouldn’t that include helping someone get a loan?

The Bible says no, and it leaves no room for misinterpretation. It warns us over and over not to do it.

Proverbs 11:15 says not to pledge “surety” for another, meaning don’t co-sign a loan for another who doesn’t qualify on his own.

And Proverbs 17:18 reads, “One who lacks sense gives a pledge and puts up security in the presence of his neighbor.”

Then in Proverbs 22:26-27 we find, “Be not one of those who give pledges, who puts up security for debts. If you have nothing with which to pay, why should your bed be taken from under you?”

What To Expect If You Cosign

Show Notes

You Might Also Like

The Ant’s Financial Wisdom

Responding to Lebanon’s Humanitarian Emergency with May-Lee Melki

When Small Gifts Make a Big Difference