Any1 know what banks look 4 in co-signer applicants? I am having a hard time finding one for my student loan.?I've been banking with Wells Fargo for a while now and I recently decided to apply for a student loan because I will be transferring to a University to begin work on my Bachelors Degree. Of course I was quickly approved, but none of my co-signers can seem to measure up to Wells Fargo's standards. Does... | |
Krys:
When someone agrees to cosign a loan, that person is agreeing to accept full legal and financial responsibility for paying off the entire loan.
Under 'normal' circumstances, the lender looks to the actual borrower for payment, but if the borrower falls behind, the lender has every legal right to turn their attention to the cosigner, and demand payment in full.
You might like to think of this like a "tag team" operation, where the lender might need to contact your cosigner, from time to time, when you're having a little trouble making ends meet, but that's not really how it works. Once the lender has chosen to look to the cosigner for payment, the lender has the right to "accelerate" the repayment of the loan, making the entire balance due immediately, and they can (and sometimes will) sue the cosigner for immediate payment of the loan.
To be very honest with you, cosigning a loan is one of the most irrational financial decisions that anyone could ever make. When you cosign a loan, you place your entire credit history and all of your assets and savings at the risk of the person you are cosigning for.
If the borrower experiences any kind of financial setback (loss of employment, serious injury, medical leave, maternity leave, failed investment, legal judgment, etc.), his/her innocent cosigner becomes fully liable for the loan - and the lenders aren't "understanding". They want one thing - and that's repayment of their loan.
What does Wells Fargo look for in a cosigner? Someone with substantial income and a sterling credit history. The income assures the lender that your cosigner has the ability to pay back your loan, and the credit history assures them that your cosigner has been extremely responsible in managing his/her own debt.
Why is it difficult to provide an acceptable cosigner? Well, since the cosigner is volunteering for full legal responsibility to repay the loan, your cosigner has to be so financially secure that they can easily manage all of their own debts AND your large educational loan debt, too. There aren't a lot of people in that situation.
One more interesting, if morbid comment about cosigning. If the borrower dies at any time before the loan is paid off (while attending school, or after graduating), the cosigner will be contacted by the lender, and asked to pay off the loan in full.
Hopefully, this information has helped you understand why cosigning is exceptionally difficult, and just about always a really bad idea for the cosigner. In that light, I think you'll understand why you're not going to find many cosigner volunteers.
Good luck to you!
they look for an established credit line and a good credit record, ie paying on time.
