I am considering co-signing a personal loan for a friend

[Cueball703]

What is the name of your state (only U.S. law)? NY

I know what the legal ramifications are if I decide to co-sign for a friend's personal loan. Is there some kind of legal contract that I can have written up between me and my friend that would give me legal recourse against my friend if he should miss payments or default on the loan? Also, does anyone have any idea how much it would cost to have a Lawyer draw up a contract between the two of us for something like that?

Please e-mail me at CUEBALL070358 at AOL dot COM

[Antigone*of*Greece]

If you value your credit you will NOT, I repeat NOT co-sign for anyone unless you are ready to take the debt on yourself.

I can't tell you how many times, how many hundreds of threads have been started on this forum looking for some help because they have co-signed for someone.

Co-signing a loan for a friend is also a great way to lose a friend. I'm sure an attorney can charge you a pretty penny to draw up a contract that in the end will have no value.

don't do it... don't do it... don't do it...

...and if you do... please be ready to come back here asking the forum for help in having the debt paid. When that happens, be ready for tons of "I told you so's."

[Country Living]

The fact your "friend" is asking you to do so tells you he's already in over his head financially because he doesn't have the credit rating or the lender questions his ability to repay the loan unless someone co-signs for him. YOUR credit rating will be impacted if your friend fails to make each and every payment on time. If your friend quits paying the loan for any reason (such as losing his job), the creditor will come after you.

Some things to consider:

• Can you afford to have your credit rating adversely impacted? A bad credit rating will impact your ability to borrow money, lease an apartment, buy a house, increase your auto and homeowners insurance premiums, and possibily stop you from getting that perfect job you always wanted.
• Can you afford to make the payments until the loan is paid off?
• Does your friendship hinge on this decision? If so, it's a friendship of convenience - his convenience.
• Why aren't his parents co-signing? This may be a strong signal they don't trust his financial decisions. I'm sure he has a dozen reasons why he didn't ask his parents.
• Read through this board to get better acquainted with the people whose lives have been ruined because they co-signed for a "friend".

[debtcollector`]

Don't do it.

The odds are very high that you will lose both your money and your friend. And you won't know the account is default and damaging your credit until someone like me calls to demand the balance in full.

DC

[Country Living]

Originally Posted by debtcollector`

Don't do it.

The odds are very high that you will lose both your money and your friend. And you won't know the account is default and damaging your credit until someone like me calls to demand the balance in full.

DC

I'm confident you would explain to her that you don't care if she has a "contract" between the two of them stating he (the friend) would be financially liable for the loan.

[Zigner]

If your friend doesn't honor the contract with the lender, what makes you think your friend will honor the contract with you?

[Roo]

I agree with everything posted, especially DC. You probably won't find out about missed payments until the account is seriously delinquent. By then the damage is done.

You'd be better off just giving your friend the money outright rather than cosigning.

[j991]

The simple answer is no, you cannot make a seperate contract making him liable for defaulting on the loan. Its referred to as a double liablity clause, and you can't do it. It prevents a person from being liable for a loan to more than one entity at any one time. By co-signing the loan with your friend you become a joint-liable entity to the bank, which means that both of you are liable for the loan.

On the advice side I agree with all of the previous posts. Don't co-sign the loan with your friend. If you can, just loan the money to him. That way you can create a contract between you and him for the loaned money.

[Who's Liable?]

Don't even loan them the money.

It saves your friendship, and it saves your credit score...

If you do loan them the money, do NOT expect to ever get the money back...