There are many “fun” benefits that you may reap when you cosign a loan for a friend or family member and put yourself on the hook for their debt. There’s upwards of a 75% chance that you’ll get to pay the loan yourself. You’ll have the pleasure of dealing with bill collectors, liens, garnishments and bank attachments if you don’t pay. Your credit score will likely take an exciting roller coaster ride as a result. Finally, your friend or family member will give you plenty of space at social events and family gatherings!
I’M BEING SARCASTIC! There are NO positive benefits to cosigning a loan, only negative legal, financial, and relational consequences. When you cosign a loan, you are willingly taking on the legal and financial burden of that debt. Banks are experts at lending money and they have come to the conclusion that your friend or family member is unlikely to pay them back.
The only way you should ever cosign a loan is if you have the money to pay it in full and the capacity to forgive your friend or family member for leaving you on the hook to pay it.