A person loan can serve a host of different purposes. Financing a vacation, consolidating debt, performing very necessary repairs are just a small number of things a personal loan may be utilized for. Acquiring a personal loan seems relatively easy. As long as someone has a good credit history and the appropriate income level, a loan should be approved. This with limited financial means and a weak credit score, however, may find themselves in a tough spot. Lenders may not be willing to give the nod to anyone hoping for a personal loan.
A would-be borrower need not feel dejected though. A borrow could always seek out a co-signer to support the loan application. Co-signing is most commonly done with auto loans, home loans, and even student loans. With personal loans, the process is not as common. Uncommon does not mean the same as nonexistent. Certain lenders may allow co-signers to add their name to a personal loan application.
A co-signer is an individual who makes him/herself responsible for repayments if the applicant defaults on the loan. Co-signers are not the same as co-borrowers, persons who would share ownership in a title of a car or property. A co-signer is more akin to a form of insurance on the loan. Again, if the primary borrower defaults, the co-signer has to pay.
A bit of risk does exist for the co-signer. If the loan is defaulted upon, the co-signer cannot walk away without impunity. The credit scores of both the signer and the co-signer would be damaged in the event of a default. The co-signer is legally obligated to pay back the loan. Agreeing to co-sign means accepting the responsibilities associated with doing so.
Borrowers should choose their co-signers wisely. Someone who might have a legitimately tough time repaying a loan does not someone who can handle the payments if a bad situation develops. Otherwise, credit scores suffer. In some cases, legal proceedings may commence as the lender seeks to recover the funds.
Co-Signers and Information
When it comes to information regarding the timely payment of the loan, a co-signer is not likely to learn about anything going wrong until payments have not been made. At this point, the lender contacts the co-signer to procure payment. Lenders do not send statements to the co-signer. All such documentation goes to the borrower.
Not all major banks facilitate personal loans, but some do. Two major banks allow for personal loan co-signing. Credit unions might be the better option for those looking for more options to borrow. Exploring different options and sources of loans may lead to acquiring a very low interest rate. Credit unions are known for their very low interest rate, which is a plus for many. Online personal loan lenders have emerged in recent years. These lenders may help those who require a co-signer in order to garner an approval.
Seeking out the right lender and the right co-signer are necessary for borrowers who look weak on paper. A co-signer might even make the weakness of the applicant a non-issue.