At some point in your child’s life, they’re going to need a loan.
It will probably be right around the time they begin considering college.
As you’re most likely well aware, the application process comes to an end once the borrower signs their name. This is also when you can benefit from becoming a cosigner on your kid’s loan.
3 Reasons You Should Be the Cosigner on Your Kid’s Loan
Obviously, cosigning your kid’s loan will mean taking on a certain amount of responsibility.
At the same time, there are three really good reasons you should still consider going through with it.
1. Ensuring They Get a Better Rate
The main benefit of providing your signature is that cosigners lead to better rates. After all, you’re giving the lender an extra layer of assurance that they will eventually receive the amount they’re owed.
That improved rate is especially important to students who have a number of other financial priorities to juggle but don’t necessarily have the income required to manage everything. If they can save for other goals instead of working during college to pay off their loans upon graduation, they’ll enter “the real world” with a lot more opportunities.
2. Showing Them What to Watch Out For
Unfortunately, a bad rate may be the least of their worries.
Many lenders prey on young people knowing full well that they’ve never taken out a loan before and won’t know what to expect. Some of these lenders are actually perfectly above-board when dealing with more experienced adults, so researching their reputation may not expose their less-respectable practices.
As a cosigner, you’ll have every reason to look over the loan before providing your signature, so you’ll be able to catch any irregularities before they become a fixture in your kid’s finances.
Don’t be surprised if you don’t catch any issues, though. Just knowing an experienced cosigner is involved will scare away any lender with bad intentions.
3. Improving Their Career Prospects
Your kid is going to college to get the degree they need to pursue a rewarding career. Unfortunately, if they can’t get the student loan they need, they may have to choose another option. This is also true if your child has plans to pursue a post-graduate degree. For example, the cost of medical school is beyond what most students could ever afford, even with the help of a loan. If they don’t qualify for enough federal funding, their only option will be a private lender.
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