A co-signer on a loan is primarily a collateral for the lender, and in support for the beneficiary of the money to be lent. However, this is a figure that is often not requested by banks. Should I request a loan with a co-signer in the USA? solve your doubt.
However, it does represent great importance for individual borrowers, who find in it a second debtor and a person on whom the debt can fall in full, to satisfy it. If you are interested in knowing what it is about, then do not stop reading us.
What is a co-signer?
To request a loan with a co-signer in the USA, first of all we are going to clarify the term, surely the first thing you will think is that a co-signer is another who signs the document with you, and in practice, that is what implying.
However, if you have to be the one to represent the role of co-signer, you must understand that at the same time you are assuming all the responsibilities involved in the loan of money, which in itself are nothing more than the total payment of the debt. .
In such a way, that the co-signer agrees to the lender, to the same obligations and payments that the debtor must make, of course, in case the latter cannot comply with his debt.
Are there advantages to being a co-signer in a money lending relationship?
The truth is that, in practice, there is no advantage, beyond the fact that your credit responsibility is recognized, that is, that if you assume a debt you are able to pay it.
Of course, in such a chaos, that you act as a co-signer of a loan, and you must comply with the responsibility, your last resort will be to go to the main debtor, so that he pays you the amount that you already had to have canceled. to the lender.
In other words, in such a case, that as a co-signer you must fulfill your duty to pay, the law grants you the right to collect what you paid from the person responsible for the debt, which is no more than the one to whom you served as guarantor. .
So, as you will realize, having a co-signer does represent an advantage, since that person serves as an endorsement and a good reference. More if you are the one who has to play this role, there is no advantage that you can obtain.
So what are the disadvantages of being a cosigner?
Practice has indicated that the debt collection processes, when there is a co-signer, pass from the debtor to the latter’s person, of course, in the event that the main debtor cannot pay the debt at the time of its demand, in effect, the lender can carry out:
- Request payment of late installments from the co-signer.
- Sue the co-signer at the rate of default interest generated by the delay in the loan payment installments.
- If the co-signer cannot pay, being forced by law, the lender keeps for himself the legal recourse of requesting the garnishment of the co-signer’s salary to satisfy his debt.
- The non-material damage that can occur in the relationship between the principal debtor and the co-signer, in fact, if the debt is not paid by the principal, the co-signer must take charge, thus, a series of demands and setbacks that can end the relationship of trust planted between them.
The figure of the co-signer is a benefit for the borrower
Per se, applying for loans with co-signers represents a real advantage for the lender, who will have a guarantee to satisfy their debtin such case, that the initial debtor cannot or does not wish to pay it.
In this way, we are facing a second option available to the creditor to see his debt fully satisfied. This being the case, applying for a loan with a co-signer can open up the possibilities of acquiring better credits, but you must be aware of what this role represents.
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