Consumers are putting themselves in danger by putting their names on the line when they co-sign loans.
Los Angeles-Long Beach, CA (PRWEB) March 29, 2014
Debt Consolidation USA believes that co-signing loans is never a good idea regardless of who is making the loan. This is why they published the article “Should You Or Should You Not Co-Sign A Loan?” last March 24, 2014.
The article basically discussed how consumers are putting themselves in danger by putting their names on the line when they co-sign loans. The article explained that this is a credit arrangement wherein the consumer shares the responsibility of paying back the loan in case the principal borrower failed do so. This puts the finances and credit history of the consumer in danger and that is why the article advised against going through this type of transaction.
If the consumer is after helping the person borrowing, the article claimed that they are not accomplishing that. In fact, the article cited 3 reasons why it may be more destructive than simply saying “no” to co-signing the loan.
1. The borrower will not rely on themselves. Instead of teaching the borrower to rely on their own capabilities, the consumer will be encouraging them to just get help. There is nothing wrong with helping but self-reliance is usually a good trait to have and teach others.
2. The borrower will always opt for the easy way out. According to the article, agreeing to co-sign the loan will only teach the principal borrower that there is an easy way out. While is everyone’s intent, the consumer should understand that the easy way out is sometimes not the best course of action. This should not be encouraged and could cause more harm than good.
3. The borrower will not feel the value of the financial achievement. In most cases, the easy way out that the borrower will get can diminish the value of the goal that they are trying to reach with the loan. This is how the consumer is not really helping the borrower. The former is removing the chance of the latter to work hard for their goal.
While co-signing loans is really a case to case basis, the consumer is advised to always think twice or even thrice before they agree to it. The article explained that there may be a better way to help the borrower. The consumer can find out the reason why the borrower cannot get a loan on their own and help them solve that. If it is a bad credit score, the consumer can help the borrower repair their credit. In the end, that is more helpful - not just in the short term but also in the long term.
To read the rest of the tips provided by Debt Consolidation USA, click on this link: http://www.debtconsolidationusa.com/personal-finance/co-sign-loan.html.
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