A co-signer is someone who takes full liability for your loan and signs with you similar to a partnership. If for any reason you cannot pay off the loan, your co-signer is obligated to pay for it. Usually, it could be for housing, auto or even school loans that might need the assistance.
How Co-Signing for a Car Affects You
Co signing for an auto loan with someone who turned out not to be responsible is one of the easiest ways to hurt your credit. At Auto Credit Express, we have been helping people with bad credit issues since 1999. Unfortunately this happened to be the case for many of our customers. They had good intentions but with unfortunate outcomes due to the possible fall backs. Before you sign away, remember that you are legally reliable for the loan if the initial signer does not suffice the needs of its terms.
Put your Credit First
If you continue further and commit to co-signing an auto loan for them, make sure you know the borrower. Examine how capable they are of paying the payments on time. Do they have steady jobs? Question how responsible they are. It's important to consider that it could affect you in the long run. If the outcome turns out to be negative, think about this will affect your relationship with the borrower.
Is this person a family member or a close friend that you trust? No one wants to hurt anyone's feelings, but you have to put your situation first. When someone close to you asks you to do the favor, you could always think about gifting the money instead.
With all the cautioning that could come from this, there is some side benefit to this. One of the rewards you could get from signing on a car loan with someone would be that if the person you are signing for is paying off their payments consistently, it could help you build your own credit.
Plain and Simple
The main point is that this is a commitment that you must thoroughly think about. It is easy to want to help someone get to their goals, but remember that not only is this going to be an investment for the person signing initially, but it will also be a price for you as well.