GETTING OUT OF A LOAN I CO-SIGNED

When you are the co-signer of a loan you are guaranteeing payment of the loan to the creditor. You are not guaranteeing that the individual you are co-signing for/taking the loan out is going to pay but instead that you will pay whatever is owed, including principal, fees and interest in the event the borrower defaults. So, unless the person you are co-signing for is providing you with some sort of collateral of equal or greater value of their borrowing amount for you to keep in the event they default, co-signing a loan is a bad idea. Even if you are able to obtain collateral to secure you cosigning, don't forget the negative impact your credit will have in the event the loan is defaulted.

Unfortunately, the majority of co-signers end up regretting putting their name to a loan. Whether it be because they wizened up to the fact that their credit will be adversely affected if poor account activity occurs, or that their available credit will be effected in the event that they are going to need to apply for a loan themselves.

Getting Out Of a Loan Co-Signing
Eliminating yourself from a loan that you are a co-signer of is not an easy task. The best thing you can do prior to committing is to find out what the exit policy is for co-signers prior to signing your name on that loan agreement.

The most obvious thing to do is to remove your name from the loan and have the applicant be the sole party responsible. However, it is likely that the applicant has bad credit, hence them needing you to co-sign for them in order for an approval to be achieved. So, unless the applicant's credit is good enough for them to qualify for the loan by themselves at that point in time (when you are looking to remove yourself) then the creditor will likely reject your request. If this is the case, you will have two choices: Locate a replacement co-signer or close the account yourself.

Locating a replacement co-signer
Yeah right...good luck! You will likely have to justify to any potential takeover party your reasoning for wanting to get your name off the loan. So, unless you lie, it is unlikely that anyone with half of a brain is going to jump into the mess you are trying to get out of. It is possible that the creditor is not even going to permit such a practice anyway. That's why we suggest you know all your options for getting out from being a co-signer prior to committing.

Closing the account yourself
Close the account yourself if the loan amount is small enough for you to pay it off yourself and close the account. Work out an agreement with the borrower where they will pay you direct as opposed to the lender. Offer them a lower interest rate. Why would you do this? By becoming the creditor you are creating a more personable situation with the result being better success with getting the borrower to pay you than the lender. If they have bad credit, they likely will not care what the consequences of not paying the lender are going to be on their credit. However, they may feel bad as a result of your personal relationship if they owe you money direct instead.

Related Reading:  
Should I Co-Sign a Loan?
Getting a Personal Loan With a Cosigner

 


 

 



 

Home - Apply Now - How It Works - Approval Requirements - Testimonials
 Contact - Rates & Fees - Credit Help Info - Site Navigate

Types of Personal Financing Opportunities Offered:
Unsecured Personal Loans - Bad Credit Personal Loans
Consolidating Debt with Personal Loans

To Read our Privacy Policy, click here
Copyright 2012 - ChoicePersonalLoans.com