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Thread: Co-Sign a loan question
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Fri, Nov 16th, 2012, 03:00 PM #1
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We have been asked to cosign a loan for brother-in-law's loan application to open a business.
What do I need to know before signing the loan?
Please helpThis thread is currently associated with: N/A
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Fri, Nov 16th, 2012, 03:25 PM #2
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My advice
babies teach us acceptance
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Fri, Nov 16th, 2012, 03:26 PM #3
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If he defaults, you are on the hook to pay. It's a big step to make and also puts your finances at risk. I think I would be very hesitant co-signing a loan, but that is me.
(you might get more finance responses in the finance section).
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Fri, Nov 16th, 2012, 03:44 PM #4
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If someone wants to start a business, and doesnt have enough money sense to be eligible for a loan or have enough money saved... Run!
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Fri, Nov 16th, 2012, 03:53 PM #5
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i agree with the rest - don't do it... if anything negative happens in the future, it will ruin the relationship you guys have now. Are u and hubby willing to risk ur credit for someone else?
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Fri, Nov 16th, 2012, 04:12 PM #6
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I agree with the other responses here, it's not a good idea at all.
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Fri, Nov 16th, 2012, 04:15 PM #7
Lending Money and Family ....they just don't go together....ever.
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Fri, Nov 16th, 2012, 04:28 PM #8
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If you co-sign, you are indeed liable for the debt. I did some of the initial paperwork (although I got cold feet) when my Mom wanted me to cosign a loan - I backed out when I realized it was a credit card consolidation and not a simple business loan like she had told me. From that, I can tell you that you that you have to list your own assets and these do go on the line if anything happens with BIL's loan.
Regardless of if your brother-in-law is responsible with the loan or not, your credit rating will take a hit as to TransUnion and the other agencies, you are taking out debt in your name.
My advice on loaning money to family: never, ever, ever loan any money that you want to see back. Give him a bit of money as a gift if that's something you'd like to do, but don't expect it back and don't expect anything good to come from a co-signed debt.
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Fri, Nov 16th, 2012, 04:30 PM #9
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Well said! Running a business is very challenging, especially now that times are tough. Unless it's someone with a phenomenal track record at starting businesses and who knows all the ins, outs, and upside-downs of management, etc., it is a dangerous bet. Even if someone is a skilled manager, that doesn't guarantee that they will run a successful business.
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Fri, Nov 16th, 2012, 04:41 PM #10
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Thank-you all verry very much for your wonderful advice.
Personally I don't want to do it...I gave up alot when I started to work night shifts for my family, and I'm stressed over our finance right now. Hubby at the other hand are giving in 110%, since it is his brother. hubby doesn't hear me out this time. He said if I don't go along with it, he will pull out his half and help his brother.
I feel been disrespected.
Background:
They are "divorced" couple with 1 teenage son. His wife work at nail salon, he doesn't work. They use to own a semi, but sell them a couple of years ago. Took his parents $50K LOC and spent them in 6m while vacay in US, used the $$ from the house he sold and repay his parents. Filed bankrupcy once 10 years ago. Recently bought a used Lexus for $35K. Renting for $1000 a month.
They both a big spender, being planning to open a business 10 years, and this year this want to finalize their planning and open a business.
He is a sweet talker, I guess he had persuaded my hubby to co-own the biz with him, he will take care of the details while hubby will take care of the finance. Our house still have $90K mortgage, been living in it for 8 years. The same house on our street sold for $530K this past January. I feel my life going to corrupt in front of my eyes if my husband fall for it.
I'm so stress out right now. I loss my appetite and lack of sleep. Nothing seems to fall through for me. I feel that my relationship is on the rock everytime we go through this.
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Fri, Nov 16th, 2012, 05:39 PM #11
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I've already said co-signing was a bad idea so I won't re-iterate that, but from your post there,... Run. Run, fast and run far.
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Fri, Nov 16th, 2012, 05:56 PM #12
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From the back story you told, DO NOT co-sign that loan.
Your husband should be respecting your decision as well, this your future and money you are risking.
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Fri, Nov 16th, 2012, 06:08 PM #13
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ITA...even Gordon Ramsey has had to close down restaurantswhen they were closing money. If his name and the financial skills of his mananagement company couldn't save a failing business, how would a newbie stand a chance?
I'm with the rest of the advice, don't co-sign.
However, I think you should produce a report for your husband, showing the failure rate in the business area your BIL is looking at. If you can provide facts and figures, he might re-think .
Emphise what you and he can lose. Is he willing to risk your house and your future? WIll the previous bankcrupcy affect the repayment on the loan?
Perhaps the 2 of you talking to an independant financal advisor would be another way to go. Perhaps hearing from an uninvolved third party about the potential pit-falls may help. And possibly advise your PIL so he doesn't try to get them to co-sign.
Short answer : no Long answer : NOOOOOOOOOOO!
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Fri, Nov 16th, 2012, 07:07 PM #14
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If he cannot get a loan on his own then the bank obviously views him as a risk because of his financial history and the nature of the business.
If your husband wants to take his "half" out, well you are not divorced, so it is not his "half" yet....so any loss incurred would be yours as well as his.Love like crazy everyday and smile.
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Fri, Nov 16th, 2012, 07:28 PM #15
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I hope you get a say since it does affect you and your house. If you have to sign anything, stand your ground and say no.
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