Car Loans Australia :: Articles

Co-Signing Loans - Risky Business

Co-Signing Loans - Risky Business

There may come a time in your life when you are asked to co-sign for a loan or credit card.
If this is the case, there are several things to consider before making a final decision.
Technically, you are putting yourself at risk of damaging your own credit in the event that the loan goes unpaid.

The vast majority of individuals, seeking a co-signer fully intend to make timely payments. Unfortunately, good intentions are sometimes interrupted by unforeseen problems and situations.

Your Credit Rating

Typically, when you co-sign a loan it makes it more difficult to get credit yourself.

This is because lenders take into consideration the cosigned loan, when figuring out your debt ratio.

Depending on the size of the loan, it could very well put you over your limit.  If you are asked to co-sign a loan with an open line of credit, consider it very carefully before making any decision.

No Control

Farm Equipment Finance and Loans
Looking for the best way to finance your Farm Equipment? Well, look no further! Simply submit our 2-minute business loan enquiry form ... and we'll help get you qualified for the best rate Plant and Equipment loan available from our national panel of independent business finance brokers. We also have access to the best rates and options for Business Cashflow finance for Farmers.

As the cosigner you will have no way of controlling the spending habits of the individual who will be making the purchases.

They could easily tell you they will only be spending $1000 when in reality they spend 10 times that much.

There are certain lenders who will agree to initially freezing a line of credit, if it is requested.

In this case scenario, there is less risk involved. In many cases cosigners are not notified until the loan actually defaults.

This obviously causes a problem, because it may be too late to rectify the situation.

It is wise to ask the lender if you will receive a duplicate statement or be given the ability to check payment status by phone.

If the answer is no, think twice before signing on the dotted line.

Before you Commit

Unfortunately, individuals who require a cosigner either have no credit or bad credit.

Although those with no credit history are probably more apt to make timely payments, there is still no way to be sure.

Individuals with bad credit may be prone to the same habits that resulted in a bad credit rating, in the first place.

When it comes right down to it, cosigning a loan is risky business, no matter how close you are to the borrower.

Before you commit yourself it is important to ask yourself if you can pay when your friend can't.

Debt Stressed?
If you're struggling to pay your debts as well as covering living expenses, we are here to help. Through our national panel of Debt Management specialists, we can help customers with $10k or more in debt by consolidating your existing loans, stopping Debt collectors from contacting you and re-negotiating repayments on your terms!
Free Super Advice
If you're thinking about rolling over or consolidating your super accounts, need investment advice, help setting up or administering a self-managed fund, we can help save you time and money. Our national panel of Superannuation Specialists are standing by, ready for your questions!


Finance Articles

7 things you need to know about a Hire Purchase loan 7 things you need to know about a Hire Purchase loan
There are seven things you should know before you ever think of getting a Hire Purchase loan. Knowing these things will give you control and power in the loan process. Power and control will will save you money - read more
5 Credit Killers 5 Credit Killers
A good credit score speaks volumes about your financial habits. It's the evidence most creditors need to evaluate your credit worthiness. - read more
Loan Finance: How to Shop Around Without Damaging Your Credit Loan Finance: How to Shop Around Without Damaging Your Credit
If you are considering taking out a loan, you wouldn’t go out of your way to make it harder on yourself to get approved or to get a good interest rate, would you? Yet many loan applicants would enjoy a considerably better outcome on their loan application if they followed this important rule. - read more

Finance News

Personal Loans to help Australians in need: FSO
Oct 29 :: As Australia prepares to clean up following devastating fires and floods, Financial Services Online CEO, Andrew Clark, has announced... read more
Small business loans to help Aussie businesses through tough times
Nov 27 :: Financial Services Online has today announced a new credit facility for Australian business customers who are seeking loans for amounts... read more
Police issue warning about bank scam
Nov 20 :: Melbourne police are warning people about a scam in which fraudsters pose as bankers and ask for money.They say they cold... read more

Need Help Finding a Loan?
Get a free car loan eligibility assessment and compare offers tailored specifically to your circumstances.
Loan Amount:
Postcode:
All finance quotes are provided free (via our secure server) and without obligation.
We respect your privacy.

Knowledgebase
Debt Consolidation:
A means empoyed to renegotiate debt. By combining loans and outstanding bills, a person can consolidate debt with a single financial institution resulting in a single monthly repayment.