God and money -- Cosigning for Other people's loans
When doing good can get you in trouble
You would think that helping other people is always the right thing to do, but the Bible teaches us that it is not. There are some ways to help people that are good and other ways of helping that hurt you and the person you call yourself assisting. In general, helping people to help themselves is a good thing, while helping them to be lazy and irresponsible is a bad thing.
Cosigning the loans of other people is one of those situations where helping is bad. When people want to borrow your money, they can seem so helpless and pitiful. They can tell such sad and heartbreaking stories and they can make such wonderful promises of when and how they will repay you. Those same people can change on you once they get your money. They become hard to reach, evasive, resentful and ugly. It is worse when you sign your name to someone else's obligation to pay for something. They promised they would keep up the payments on the car, the house, the whatever. Now you can't find them, the lender is calling you and your credit rating is going down the toilet.
In the Bible, Proverbs 22:26-27 says, "Do not be one of those who shakes hands in a pledge, one of those who is surety (guarantee) for debts. If you have nothing with which to pay, why should he take away your bed from under you?"
Note the first two words in this passage... DO NOT. I repeat...DO NOT. Do I need to repeat it again? I don't think so. But people always say, But I was just trying to help. Don't help in this way. It will hurt you in the end. If you want to help someone out, offer to make a payment for them. Offer to help them pay. But don't put your name on anything unless you are prepared to pay for it in full yourself, because you may end up doing just that. And to make things worse, just because your name is on the loan doesn't mean your name is on the house or car or whatever you signed on for. You may end up paying for something for the other person to enjoy at your expense. Not only is there the pain of having to make payments you didn't plan on, you feel embarrassed and foolish for being taken in this way.
Don't let other people wreck your financial house
Creditors know what they are working with
There is a reason why some people have bad credit. They are slack in paying their bills or they buy things they can't afford and then walk away when they can't pay for them. They may be lovely wonderful people in every other way, but their finances are messed up. There is a rare instance when people have circumstances out of their control, such as an illness. But these are not as common as you might like to think. Regardless of what you think of banks, loan companies and lenders, these people make it their business to know who is able to pay for things and who is not. They go to great lengths to know in advance who is a good credit risk and who is a bad risk. Part of the mess we have in the economy today was caused by lending people money they couldn't afford to buy things they couldn't afford. Some are still struggling to get their heads above water.
Furthermore, creditors are in business for one reason only...to make money. This is not wrong. Everyone who works on a job or who owns a business is trying to make money. Lenders are no different from anyone else. In light of the recent economic events, you can't blame some of them for being cautious with their funds. If you are fortunate enough to have good credit, you need to protect it as much as they do and not let emotion cause you to wreck it. You need to be just as cautious about someone with "bad credit" as any bank, and maybe more so, because you don't have a government agency to bail you out.
This teaching from the Bible clearly tells us to just say no to cosigning other people's loans. It will save you a lot of headaches and heartaches and money if you heed this advice.