This piece is part of my 2016–2026 archive migration. Some original formatting, content, and external links may be missing, changed, or not be optimized.
Just say, “No, thank you.”
“According to the FTC, depending on the type of the loan, as many as three out of four primary borrowers default on their obligations, leaving the cosigner to pay. This is, after all, why they need a cosigner: they’re not good credit risks, either because they have too much debt already, or because they don’t pay their bills on time” (Megan McArdle).
I’ve had opportunities to cosign loans for people who appeared financially responsible and others who were not financially responsible in any capacity.
Whether a person is earning a lot of income or isn’t financially responsible doesn’t matter to me; what matters is why the person needs me to cosign the loan with them in the first place.
Why can’t they handle their financial business without me?
People who need a cosigner usually lack financial responsibility or history or have sketchy financial histories, so if a person asks you to cosign a loan with them, think thrice.
Thankfully, I have never consigned a loan with anyone, and I am exceedingly grateful that I listened to my instincts on this because if I did, it would have cost me my peace of mind, time, and money.
Only cosign a loan with someone if you’re okay with getting stuck with the bill because it is VERY possible you might get stuck with the bill since they have a history of executing financially irresponsible habits.
Politely Decline And Don’t Judge Them
When someone seeks you to cosign a loan, they will likely be desperate.
First, it’s essential never to come off as judgemental of others’ financial situations. Sh*t happens. The goal is to recover and elevate your finances from any low point, but this needs to happen in a self-journey, not a paired journey.
Some people wanted to go into business together or buy a car with my name cosigned on it, and in other cases, I simply politely declined.
Never entangle yourself financially with someone who is struggling financially. You’re only setting yourself up for failure and stress. It might seem harsh to decline to help someone in need (depending on the relationship), but when you try to save people who struggle financially, you will likely have to save them repeatedly until they learn the lessons and ultimately get to a point where they don’t need you to cosign a loan with them.
Allow people the opportunity to save themselves and help them in other ways.
Other Ways To Help Others Financially
There are other ways to help others without financially entangling them.
Encourage them to seek other loan options.
Donate to them without the expectation of receiving anything back.
Encourage them to increase their income to build a more significant downpayment.
Encourage them to pay down their current debts before taking on new debts.
Encourage them to consume personal finance material to improve their financial outcomes.
If you have stellar credit, add someone to your credit card to help build their credit, but don’t give them access to the credit card.
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This content is for informational purposes only — not professional advice. Consult a qualified professional before making any major decisions.
This content is for informational purposes only — not professional advice. Consult a qualified professional before making any major decisions.