Should you co-sign for a stranger?

The ongoing economic slowdown has caused many people in Atlanta and throughout the country to consider options and seek assistance in ways they never thought they would have to. One example of this is co-signers. If you don’t have the credit to qualify for a car, personal, business, home or student loan, and you don’t have a family member or friend who is willing or able to co-sign for you, what can you do?

Some people, in lieu of any other options, are using a creative solution for this issue: seeking strangers to co-sign their loans on Craigslist or other Internet boards. If you need a co-signer, should you try to find one on Craigslist? If you see an ad for a co-signer online, should you answer it? In most situations, experts say, the answer to both of these questions is no.

If you decide to seek a co-signer on Craigslist, consumer advocates say, you could be setting yourself up for even greater financial woes. Often, the people who answer co-signing ads are scammers who will take your personal and financial information and steal your identity.

And if you answer such a loan, the risk could be even greater. Not only will you face the same identity theft threat, but even legitimate borrowers could significantly harm your financial future. When you co-sign a loan for someone, you are expected to pay the loan back in full if the borrower defaults. Even if you and the borrow sign a contract stating that you are not responsible for the debt, the lender will still go after you if the borrower stops making payments, and it is then up to you to get the borrower to pay the debt.

Source: CNN Money, “Desperately seeking co-signers – on Craigslist,” Blake Ellis, Nov. 8, 2012