Three out of four cosigners of finance company loans are eventually asked to
pay up.
There may also be late charges due to a friend's or relative's delinquency.
Sometimes even court costs and legal fees. Besides having to pay off the original
loan, cosigners may damage their own credit rating in the bargain.
Advice: Never cosign a loan unless you can pay it off if necessary. Try to get
the lender to hold your obligation to the principal of the loan. Never pledge
your own property to secure such a loan.
Request notification in writing of any missed payments. That way you are aware
of the borrower's delinquency and can either make the payment yourself or prod
the friend or relative before the loan is called for or there are penalties.
One-to-one loans. No matter how friendly a loan, it's a good idea to draw up
a note stating terms and conditions. Be businesslike. Include a provision for
reasonable interest.
Good reason for formalizing the loan: The IRS.
With documentation, you should be able to take a deduction on any loss. Unless
the loan was directly connected with your business, it will be treated as a
short-term capital loss.
We hope these articles will give you the consumer information needed to make
more intelligent choices in your financial and loan decisions. Our customers
success and bright financial futures is of utmost importance to us. We truly
look forward to being your current and future source for fast cash personal
title loans when needed.
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