Personal loan and co – signer: What are the questions you need to answer?

Amongst all the loan options available in the financial market, the personal loan has always been a viable option. Not only does it provide you with financial flexibility, but it also offers you the means to opt for a loan amount that is not restricted. Additionally, since you can also apply for personal loan online, you can enjoy a convenient loan application.

However, to enhance your chances of getting a better loan amount, while enjoying a flexible repayment procedure, you can opt for a co – signer. A co – signer is another individual, who would share the same responsibility as a sole owner and whose financial profile will be combined with the primary applicant to increase the overall financial profile.

This facility is available to most loan options. But before you apply for this loan along with a co – signer, here are a few questions you need to answer before you proceed with the application.

Are you aware of the responsibilities as a co -signer?

If you are going to take on a co – signer for your personal loan, both individuals must be aware of the responsibilities. The co – signer should understand that it would be their responsibility if they primary applicant fails to repay back the borrowed funds. If the co – signer has a better credit score, the lending institute may approach this individual for the repayment.

What is the appropriate payoff plan?

Regardless of a co – signer, you must have a plan to pay off the loan. This is even more crucial if you have a co – signer as it is crucial that you have a plan that matches each other’s requirements. Additionally, it should not affect your co – signer’s credit history. Something as simple as a missed payment of a defaulting on loan will affect both the primary applicant and the co – signers credit score. Alternatively, if you make timely payments, it will help increase your credit score.

Are you planning to borrow more than you can afford?

Whether you are planning to apply for personal loan online or at the bank, you and co – signer should ensure that each of your monthly loan payment amounts should not exceed your reasonable pay. Even though having a co -signer will help qualify for a larger loan amount, it is recommended that you opt for a limited amount. In other words, borrow only as much as you need and can afford.

Can your relationship survive?

You’ll be surprised how co – signing a loan can affect more than your credit score. It can also risk your relationship. Placing a financial issue between two individuals can change a relationship either in a good or bad way. Either the stress of the borrowing funds can strain a relationship or provide a means to strengthen it through open communication and mutual responsibility.