A few months ago, a reader asked me about co-signing for a car loan. My answer to him is the same as my answer to you…
It’s a financial decision that could prove costly.
How costly? Here’s some new information I didn’t have back in March: “38 percent of co-signers had to pay some or all of the bill because the primary borrower did not.” That’s from a new study conducted by CreditCards.com.
While most co-signings are auto loans (51 percent), a good portion are student loans (19 percent). So you’re not alone in your quandary, Paul.
Still, I maintain you should not co-sign your daughter’s loan. Here’s a good reason from that same study: “26 percent of co-signers said the experience damaged their relationship with the person they co-signed for.”
Instead, I urge your daughter to take that job, save money, and return to graduate school later. What about those student loans she has now? She can ease the burden by enrolling in a government program that can slash her monthly payments. She can read about that in Debt.com’s Student Loan section, or if she prefers, she can simply call a Debt.com counselor at 1-800-810-0989 for a free consultation.
Even if you decide to indeed co-sign your daughter’s loan, I hope you’ll call us for a consulation first, Paul.
Have a debt question?
Email your question to firstname.lastname@example.org and Howard Dvorkin will review it. Dvorkin is a CPA, chairman of Debt.com, and author of two personal finance books, Credit Hell: How to Dig Yourself Out of Debt and Power Up: Taking Charge of Your Financial Destiny.