For the most part, it’s never been easier to apply for a loan. Even millennials with little to no credit or financial history can borrow large sums of money.
Of course, that doesn’t necessarily make it a good idea.
Far too often, millennials are taking out loans without the benefit of having a cosigner. If you’re the parent of a millennial, your signature can make a big difference to your child’s loan.
3 Reasons to Cosign Your Millennial’s Loan
Although your millennial son or daughter may have little difficulty with borrowing money, there are three very good reasons why you should volunteer to be their cosigner.
1. Walk Them Through the Entire Process
There is an army of lenders who are constantly on the lookout for borrowers. This includes your millennial. Unfortunately, it’s easy to overlook warning signs when you’ve never borrowed money before. Your kid may fall for any of a number of different marketing tactics that convince them they’re getting the deal of a lifetime.
It’s only later that they realize that the terms may sentence them to a lifetime of financial strain.
As a more experienced borrower, your oversight can make all the difference. In fact, just knowing that you’re part of the process will convince lenders to be as open and transparent as possible with your child.
2. Help Them Secure a Much Better Rate
Speaking of the terms of a loan, it probably goes without saying that this is one of the most important factors to consider before accepting money.
The biggest benefit of having a cosigner is that the borrower will receive much better terms. Obviously, this is because you’re accepting responsibility for its repayment.
If your child has very little to prove they’re going to be a good borrower, your signature may even be the only reason they receive a loan to begin with.
3. Make Sure They Get into the Best Possible School
Does your child need a student loan?
If so, your signature could be the only reason they get into the school of their dreams. If they are hoping for a particularly expensive degree (e.g. a doctorate), cosigning may be the only way they can even pursue their dream profession.
When taking out a student loan, it’s still essential that your child understands the process and locks in the best possible terms.
Does Your Child Understand the Importance of a Cosigner?
Understanding these three important reasons for cosigning your child’s loan is a great start, but it’s just as vital that you talk to them about the process, as well.
After all, as long as your child is at least 18, they have no lack of opportunities for taking out a loan. Speak with them about how you can help as a cosigner before they make the mistake of borrowing money without one – a mistake that could have dire consequences.