Is your child going to need a loan in the near future?
Maybe it’s a student loan to attend college or a mortgage to purchase a home. They may just need a small loan to buy a car.
Whatever the case, you should consider cosigning that loan for them. 
3 Reasons to Cosign Your Kid’s Loan
Being a cosigner is definitely a big responsibility, but there are at least three very good reasons to consider being one for your kid.
1. Teaching Them the Process
There is absolutely no shortage of lenders these days, so even a millennial like your child should have no problem finding someone who will give them the loan they need.
The problem is that if your kid doesn’t know what they’re doing, they could walk away with the money they wanted but also an unfavorable rate they know nothing about.
While it’s always best to understand how lending works before so much as even applying for a loan, there’s no law that this is a requirement for accepting one.
That’s why it’s often a good idea to cosign your kid’s first loan. By default, this makes you an integral part of the process. You can go over every step of it with them to ensure they understand what it is they’re signing their name to.
While your signature will help them achieve a more favorable rate, your involvement may be the only reason they don’t accept an extremely unfavorable one.
2. Giving Them a Better Rate
The main benefit of having a cosigner is to earn a better rate on a loan.
This is always helpful, of course, but it can make all the difference for your kid. As a millennial, they may not have very good credit or no credit to speak of at all. So without your signature, they will receive a very unfavorable rate.
Many lenders won’t even offer a loan to people who don’t have an established record of good credit.
3. Helping Them with Their Education
Taking out a student loan has become just as much a part of going to college as choosing a major, signing up for classes, and buying books.
Nonetheless, that certainly doesn’t make them any more affordable. In fact, going to college is becoming more expensive every year.
Of course, federal loans – the most popular option – don’t always cover all the costs involved. If your child plans on going to medical school or has some other dream that requires more funding, they may need private loans to cover the difference.
So it should come as no surprise if your kid asks you to cosign on the loan – or, realistically, loans – they need to go to school.
These can be more expensive still, making it all the more important that they have a cosigner.
Talk to Your Kid About Cosigning
Make sure you talk to your kid about acting as their cosigner long before they begin considering a loan. The last thing you want is for them to secure unfavorable terms simply because they didn’t know how much you could help.
With one simple conversation, you can enjoy the three benefits of cosigning a loan for your kid that we just discussed above.
I walked a younger family member through the student financial aid and for the first year the loan process every step of the way, but I’d never have cosigned the loan, I’d have given her the cash if I’d had it. If she missed a payment I get nailed on MY credit. If she defaults, I’m left owing the loan. She was an amazingly responsible young adult then and an adult now, but it just isn’t a great idea to hand your future credit over to someone and expect that individual will understand and respect the harm that even simple things like paying late can do to the person who has cosigned. There are lots of ways to help young people with their college expenses. Tying your credit to theirs is not the best option.
I fully support encouraging and education your kids and even family members who don’t have access to help about financial aid, including loans. I NEVER advocate signing for a loan you don’t have control over paying because it can really create issues with your own ability to access and use your credit.
Thank you Sheltie for your perspective on cosigning, good points. Kid do need to become independent and what you did was admirable.