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The Risks Of Co-signing for a Bad Credit Loan
Lenders who offer bad credit loans usually require the applicant to have a co-signer. Many people who have imperfect credit history ask their friends or relatives to help them get their loans approved by co-signing the contract.
Have you been asked to co-sign for someone? If yes, have you considered the possible risks involved with being a co-signer? Are you clear about what your duties and responsibilities would be as a co-signer? What can you to protect yourself as co-signer? In this article, lets answer these questions one at a time.
Possible Risks Associated with Co-signing Co-signing a loan for another person means that you guarantee that he/she is capable of the loans repayment. With this assurance, you agree to take over the repayment obligations in the event that the primary loan holder defaults.
Unfortunately some people immediately sign-up the contract without first reviewing the Terms and Conditions or without a clear arrangement with the primary loan holder. Take note that as a co-signer, your personal credit history can be damaged in case there are problems with the loan holders repayment.
Some lending companies will only try to get in touch with the co-signer after the primary loan holder defaults. However, the damage has already been done to your own credit. You may also be taken by surprise that you are now accountable for the loan holders debts.
Some co-signers also found themselves in the middle of a messy situation. By the time you need to apply for your own loan, you may find it difficult to get an approval. Lenders may see you as a “risky” client because you are already responsible for another loan. Although, it isnt directly under your name, you are still responsible for its repayment in case of default.
On the other hand, if the lender feels that you are still capable of taking on a new loan, you may get an approval. However, if your credit rating has been pulled down due to someone elses late payments, you may not qualify for the best rates from your lender.
Thus, the best advice to remember before co-signing a loan is to treat it as if its your own. If you are not sure whether you can keep up with its repayment, then it would be safer not to co-sign the loan.
Co-signer How to Protect Your Own Credit If you are willing to co-sign, the best way you can protect your personal credit and reputation is to closely monitor the primary loan holders payments. Request the lending company to send you a copy of the monthly notices or updates so you can be immediately made aware if the loan holder falls late with the payment.
Evaluate the Terms and Conditions with the loan holder. Make sure that the person you are co-signing for is clearly aware of his/her obligations. If you have any concern, dont be afraid to discuss the matter with your friend. Make an agreement with your friend and ask him/her to talk to you about anything that concerns the repayment. After all, it is your credit and finances that is also on the line.
Cheap unsecured loans: Full monetary security assured
You may feel the need for cash at anytime and for any reasons and there are no particular types of problem that will keep occurring to you any time. You never know, if today you have monetary problems that you need cash for assisting your child for his further studies then tomorrow there be another reason like that your medical treatment. So, in order to be stay prepared for all kinds of financial scarcities and to get adequate financial help in any of your issues you must know which loan is suitable for you and which loan you should opt for when. When the need for cash is not much bigger and you are not interested in providing collateral or do not have any property to keep as security then the best suitable loans for you will be the cheap unsecured loans.
These cheap unsecured loans are free from the collateral system and offer an amount ranging from £1,000 to £25,000 for duration of 1 to 10 years. Both the loan amount and the repayment terms are pretty supportive and you can easily make repayment of it within that duration. However, you will have to keep one thing in mind that the rate of interest in it use to be quite higher. So, if you can make it possible to finish the repayment as soon as possible as then you will be able to avoid paying the rate of interest every month.
The offered amount in the cheap unsecured loans can help one in lot many of his needs and requirements. A few of the matters in which you can take help from these loans are:
paying off unpaid debts
buying a used car
supporting medical treatment expenses
arranging you wedding ceremony
supporting your child’s further studies or
buying holiday tour packages
The cheap unsecured loans can prove to be very helpful to the bad credit holders as well. No adverse credit holders will be barred in it and they too can avail the same good facilities and benefits as other good credit holders. A handful of such poor credit records include CCJs, late payment, defaults, bankruptcy, skipping of installments and IVA.