Co-signing your kids’ accounts and loans

Greg’s son Troy is asking him to co-sign a loan. Which choice do you think is best for Greg?


Troy is freshman in college. He hopes to get a job next summer. He’d like to buy a car but doesn’t have enough savings to buy one or enough credit in his own name to get a loan. So he’s asking his dad, Greg, to co-sign the loan, but promises that he’ll make all the payments. Greg has good credit, but he’s just launched his own business and cash is scarce. How should Greg respond?
Co-sign the loan. This is a good use of his strong credit rating.

Scenario: Result

See the real-world consequences of your choice and read the coach's commentary.


Greg “I thought that helping Troy out was a good idea, but a year later I don’t think so. Being a co-signer meant that I was equally responsible for the loan. Troy didn’t have the income to hold up his end of the deal, so I had to pay or he’d lose the car. That put extra financial pressure on me, my credit, and my new business.”
Co-sign, but get a cash advance for a large down payment to reduce the monthly loan payments.

Scenario: Result

See the real-world consequences of your choice and read the coach's commentary.


Greg “I thought this was a quick solution to help Troy but what a mistake! The interest rate on my cash advance was gigantic. Then, when Troy was unable to make the payments anyway, I was equally responsible as the co-signer. With my new business, I just couldn’t spare the cash, and the bank ended up repossessing the car.”
Don’t co-sign. Suggest to Troy that he wait or consider alternatives.

Scenario: Result

See the real-world consequences of your choice and read the coach's commentary.


Greg “This was the best choice for both Troy and me. We sat down to talk it over. I explained that before you take on debt, you have to consider your earning power. As a full-time student, he just isn’t earning enough to take on loan payments. And with my new business, I wasn’t in a position to take equal responsibility as his co-signer. After thinking it through, Troy realized he could get by with a scooter for now.”
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