Ask Consumer Ed: Should you co-sign a loan?

Ask Consumer Ed: Should you co-sign a loan?

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ATLANTA -

You may have been tempted to help a friend or family member by co-signing a loan for them, but is it really a good idea?  

The Governor's Office of Consumer Protection pens a consumer column called Ask Consumer Ed, and their lawyers research and answer your questions.  In this case, they received a letter from a parent who wrote,"My daughter wants me to co-sign a loan for a car.  If she is late on a payment, will this affect my credit, as well as hers?"

Department Head John Sours says absolutely.  If there's a late or missed payment, it will go on your credit report, too.  As a co-signer, you're as legally liable as the person you're cosigning for.  

That doesn't mean you don't do it, but it does mean you have to ask a lot of questions up front.  The main reason for co-signing is to help a young person establish a credit rating or to get ahead a little bit, but everyone involved needs to be aware of the risks.

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