First of all, what is a cosigner? They are a parent, grandparent, guardian or other adult who is willing to cosign a loan. This means they are taking legal financial responsibility for the debt with you. Cosigners generally help a borrower meet the loan’s credit requirements and may help the borrower qualify for a lower interest rate.
If you’re looking for a cosigner, you’re not alone. Over 90% of private student loans include them. There is a lot to keep in mind when trying to find a good candidate. Here are some helpful tips to keep in mind as you move through the process.
Know what makes a cosigner eligible.
Before asking anyone to be your cosigner, make sure they are eligible. First, they need to be old enough, which depends on your state’s requirements. They also need to have a good credit score and stable finances or a steady income.
Find someone who is willing to help you.
Cosigning a loan is a long-term commitment that can last for up to 20 years, and there’s a lot to it. A cosigner is obligated to make payments if you don’t, and cosigning could damage their credit if you fail to repay the loan on time. Be sure whoever you choose is ready to take on this financial responsibility for the long haul.
Start with family and friends.
The first place to look for a cosigner is within your family. Most people start with their parents or their spouse. People who are loyal to you make good candidates. If these choices aren’t right for you, look beyond your immediate family. Grandparents, aunts and uncles are usually the next best option.
After family comes friends. If you can’t find anyone in your bloodline who would make a good cosigner, step outside the family. Friends or mentors are a good option if they trust you and are willing to back you up.
Convince your cosigner.
Once you find the perfect candidate, it’s time to sell it. You need to convince them that you are a good investment. State your case, come prepared and be honest about the risks involved.
Talk about why you need the loan, your plan for repayment, and why you can handle it. It’s also smart to understand the financials beforehand. Make sure you’ve got all the info about the loan including the term, interest rates and estimated monthly payments. If you show your candidate that you’re financially responsible, they’ll be more likely to sign that dotted line for you.
Know what to avoid.
Just like there is a right way to find a cosigner, there are a lot of wrong ways as well. It’s never a good idea to look online to find a stranger to help you out. Don’t post or respond to other posts on Craigslist about cosigning loans. Additionally, don’t use one of those websites that match students to cosigners they don’t know. When searching online, you’ll run into hidden fees and con artists.
Finding a cosigner for your loan can be a daunting process, but it’s important to do it right. Find someone who supports you and is willing to make a long-term financial commitment. When looking for a good candidate, stay safe by starting with your close family, then extend to more distant relatives, and finally friends or mentors. Convince your cosigner that supporting you financially is a good decision and research all the info before talking to them about it.
Once you’ve found the perfect cosigner, we’d love to continue to help you out. Let us know if you have any more questions about student loans!