Whether you’re a student seeking help from a loan co-signer or you’re considering helping someone obtain a private student loan, it’s critical that you understand the implications of your decision. Before you sign your name on the dotted line, there are details you need to know about risks, obligations and the potential for obtaining a release from the arrangement. This guide to co-signing on a private student loan in San Diego provides some general details to help you weigh your options.
Cosigning Student Loan Benefits
Benefits of Obtaining a Co-Signer: There are a number of reasons you might want to have a trusted person co-sign your private student loan:
- Loan Approval: If you choose a co-signer with good, established credit, there is a greater likelihood that you’ll be approved for a private loan. This is especially true if you have a limited credit history or a bad credit rating. Without a suitable co-signer, you may be turned down.
- Lower Interest: Your co-signer’s credit score will be weighed – as will yours – when you apply for a private student loan. Together, your ratings may mean you’re entitled to a lower interest rate on your loan amount. This can add up to thousands of dollars in savings over the life of your loan.
- Credit History: Any time you obtain a private student loan and make regular, on-time payments, your credit score benefits. Having a good credit history entitles you to better rates and loan arrangements on cars, a home and other credit arrangements.
How Student Loan Co-Signing Works?
Understanding Your Obligations as a Co-signer: If someone approaches you and requests that you act as a co-signer on a private student loan, it’s essential that you understand your responsibilities. Both the borrower and the co-signer are obligated to make payments under the terms of the loan agreement. Missing or making late payments will become part of the credit history for both of you. Some co-signers find themselves in the unfortunate position of having to make payments because the borrower cannot – simply because they want to avoid a credit rating problem. You should be confident in your belief that the borrower will be responsible in handling loan payments before signing any documents.
Possibilities for Relief: Upon graduation, the assumption is that the borrower will be working in his or her career and be fully capable of making timely payments for the loan. For this reason, many private student loan lenders will offer a release that eliminates any further financial obligation for the co-signer. The requirements vary, but the lender will look at factors such as payment history, principal versus interest and other credit issues. The borrower initiates the release by filling out an application and the lender must officially approve before it becomes effective.
When you’re considering co-signing a student loan in San Diego or requesting that someone help you out with financing, it’s essential that both parties fully understand the implications of the arrangement. It’s also wise to consult a professional with experience in private student loans before making such an important financial decision.
Student Loan Debt Help in San Diego
Call Gamez Law Firm for a FREE consultation to discuss your student loan debt options. Daniel R. Gamez, an attorney focusing exclusively in debt settlement, is licensed to practice in all state and federal courts in California and Texas. Mr. Gamez owns and operates the Gamez Law Firm in La Jolla, CA. For more information, please contact Daniel Gamez at 858-217-5051, firstname.lastname@example.org or visit gamezlawfirm.com.