When your family or friends ask for your cooperation in signing up a loan, its best to take a well thought out decision. Do not say a ‘yes’ in a haste! You can consider other options, instead of applying for a personal loan as a co-applicant/co-signer. Whenever you apply for a personal loan, it is imperative to take the possible risks into consideration.
In this article, we will focus on how to manage the risks well :
Understand your borrower profile well:
There are risks attached to becoming a co-applicant for someone else. Therefore, its best to know your borrower well before a commitment. It is futile to take personal loans without an urgent requirement. Cosigning an application in collaboration with a stranger is highly hazardous.
Scrutinize your budget:
When taking a personal loan, it is possible for the primary applicant to default on the payments to be made. Evaluate your personal budget to know if the loan repayments can be easily done. Just stay head to head for such murky situations. The primary borrower also evaluates his own budget before committing his future repayments. This shouldn’t be a major debt obligation at the time of repayments or newer loan options in times to come.
Precautions to save extra dues:
It is immensely important to have all the documents ready. Get multiple copies to reconcile credit statements and papers. You must also have your contact details registered for getting loan documents well in time. You may also want to duplicate documents along with login credentials and debt records.
Distance yourself from being a cosigner-know how!
It is advisable to get off as a cosigner and co-applicant, at the fastest possible. There are chances for you to distance yourself from the loan provider at the earliest possible. One way out is to have your primary borrower to refinance the personal loan under one name.
A few loans like an education loan needs co-applicant for the process to initiate the loan approval process. These loans have a certain set of norms to be followed before the approval phase and on time payments of a loan. The primary or co-applicant must request for initiating the release process at the earliest.
Alas, ensure to check with your borrower if he has already explored all possible avenues for a personal loan, instead of taking in a cosigner straight away. As a co-applicant both your credit standing and your hard-earned money are at high stakes.