Should I cosign a car loan for a friend?

My friend doesn't have a great credit score but is super trustworthy. We've been friends for almost 20 years. He wants to get a car loan, but he needs a cosigner. Should I cosign for him?

Answer
Cosigning a car loan with your friend is a kind gesture, for sure! But you should still be wary of all the responsibility that comes with it. Before you sign on the dotted line, consider these aspects:
  • Are you willing to accept financial responsibility for someone else for years at a time?
  • Do you want to check the car loan each month to make sure it’s paid for the next five to seven years?
  • Do you have the cash to pay for this loan every month if your friend doesn’t?
  • Can your friendship withstand the hit of this financial pressure, especially if your friend is unable to pay?
Only you can answer these questions, but if you can’t answer yes to all four, you may want to think long and hard about cosigning for the loan. At the end of the day, cosigning could cause you money and credit troubles that aren’t worth the risk.
As an alternative, though, you could offer to go through his credit report together or help him find other ways to build his credit.
You may also want to discuss car insurance if or when he decides to purchase the vehicle. Letting him know that he can save money through the Jerry app may be a significant help—we’ll get him customized quotes from top providers so that all he needs to do is pick the plan that works best for him. (And once he picks one, we’ll even help him switch!)
Best of luck to you and your friend!
Eric Schad
Answered on Nov 22, 2021
Eric Schad has been a freelance writer for nearly a decade, as well as an SEO specialist and editor for the past five years. Before getting behind the keyboard, he worked in the finance and music industries (the perfect combo). With a wide array of professional and personal experiences, he’s developed a knack for tone and branding across many different verticals. Away from the computer, Schad is a blues guitar shredder, crazed sports fan, and always down for a spontaneous trip anywhere around the globe.
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