Planning to co-sign for a loan? You may want to rethink it.
According to a new CreditCards.com report, nearly four in ten co-signers had to pay some or all of the bill because the main borrower did not.
Nearly three in ten took a hit to their credit score because the primary borrower paid late or not at all and about a quarter of people reported the deal hurt the relationship they had with the person they vouched for.
"With a 38 percent chance of losing money and a 26 percent chance of damaging a relationship, co-signing doesn't sound like a very good bet," according to Matt Schulz, CreditCards.com's senior industry analyst. "If you absolutely have to co-sign, then at least be aware there's a sizable chance you'll lose some money and/or get your feelings hurt."
Topping the loan list? A car loan. Personal loans, student loans and credit cards followed.
According to the study, avoid co-signing if the person has a history of not paying bills or if you’re not financially stable yourself.
Princeton Survey Research Associates International interviewed more than 2,000 adults to reach these findings.
