Cosigning a loan means agreeing to be equally responsible for repayment if the primary borrower can't pay — it's a meaningful commitment that's often underestimated by both parties.
What You're Actually Agreeing To
As a cosigner, you're legally responsible for the full loan if the primary borrower misses payments, not just a portion. Missed payments also appear on your credit report, not just theirs.
Before You Agree
- Confirm you could afford the full payment yourself if needed
- Understand it may affect your own ability to borrow in the future
- Get everything in writing, including any informal repayment agreement with the borrower
Alternatives to Cosigning
If you're not comfortable with the full legal responsibility, consider gifting or lending the person money directly instead, or helping them find a lender that accepts alternative income documentation.
How to Protect Yourself
Ask to be notified directly by the lender if a payment is missed, so you can address it before it seriously damages either party's credit.