Happy Friday everyone! I'm wondering if anyone has experience with co-signing. Have you ever been burned by co-signing a loan for someone? Or have you co-signed and had everything work out fine?
This week, I answered a letter from a mom whose 25-year-old daughter just started working. Her daughter wants her to co-sign for an $800,000 home. Yikes! https://www.thepennyhoarder.co...o-sign-on-800k-home/
I usually tell people not to co-sign because I've heard so many horror stories from people whose great credit was destroyed because they tried to help a loved one.
On the flip side, every so often, I get a letter from someone telling me about a time when co-signing worked out. For example, another mom recently wrote me to say that her 22-year-old son was buying a used car. He had no credit history and would have paid over 20% interest. She co-signed, he got a lower interest rate, and he made all the payments as agreed. I'm sure there are lots of stories like this. I just don't hear that many of them because most people don't write an advice columnist to say that everything's going great.
I think when co-signing makes sense is when you're doing it for someone who lacks a credit history. But when the person has a terrible credit history, I'd be extremely cautious.
What does everyone think: Is co-signing ever a good idea?