According to Consumer Financial Protection Bureau (CFPB), 90 percent of lenders need undergraduate students to have a cosigner. Even if you’re on a scholarship program, you may still face financial challenges.
Because you’re a grown up, you’ll have to take responsibility of yourself by buying your own meals, buying your own clothes and purchasing some of your personal items. So, you may need a cosigner to help you secure your undergraduate loan.
Four Limitations of Co-Signing
You’d think that getting a cosigner is the best idea. After all, you need their help to complete your studies and start your job hunting. But before you decide whether to get a cosigner, have a look at some of the limitations of getting one. An example of a loaning company you’d probably want to try out is LoanReviewHQ.
1) You’ll Be Leaning on Your Co-Signer a Bit Longer
Whether the cosigner is your mom, dad, close relative or even a friend, you’ll be leaning on them a bit longer. As a “young adult” you’ll feel like you need to start taking care of yourself; buying your own meals , buying your own clothes and buying your personal items. But taking a loan with the backing of a cosigner is a step backward. If for instance your cosigner is your parent, then you’ll be dragging them back. So, when you default in your payment, they’ll be held responsible.
2) Putting Your Family in Danger
If you’ve made up your mind that your cosigner will be your parent, then you’ll be posing danger to him or her. You may feel like everything is normal, but in real sense, you’ll have disorganized your family’s plans.
You may be having siblings who will be joining college and probably, they’ll also want the support of your parents. So, making any of your parents a cosigner will worsen things and disorganize them in the long run. So, try to be fair to them and to your siblings.
3) Your Co-Signer Will Be Sued First
You should remember that when you needed your student loan, you went to ask either your parent, relative or friend to be your cosigner. You may have even pleaded with them and assured them that you’ll pay your loan in time to keep them from any penalties.
Because you want to maintain the stellar relationship, you should keep your promise by working hard to repay your loan. If you don’t, the lending institution will sue your cosigner first which may spoil the chemistry between you.
4) You’ll Be Left Hanging If Your Co-Signer Passes
You may have secured your loan through the help of a cosigner, but unfortunately, he or she passes away. This may be unforeseen, but the reality is that such calamities can rise. In most cases, the lending company may decide to stop disbursing your loans because they are not certain that you’ll pay back. That means, you’ll be left hanging, which may disorganize your education.
With the above limitations of getting a cosigner, you may be discouraged. But remember, it’s not a must to have one; you can secure student loans even without cosigners. So, play your cards well to make sure you don’t mess up.