The risk of signing as a co-maker to a loan

[Alexandoy]

When I was working in the bank we had an informal savings and loan association where members deposit a fixed amount every payday. The collected money is lent to borrowers with interest. At the end of the year the entire amount is distributed. The members receive their invested money plus the dividend.

Only the members can avail of a loan. But non-members can still get a loan if a member will sign as a co-maker. I once signed as a co-maker to a borrower that I consider friend. The loan was paid. Unfortunately for a colleague, a borrower that he signed as co-maker did not pay. The co-maker had to pay back the loan in full plus interest and penalty. That is a neat lesson to me.

 

[samsamanthaa]

When I was working in the bank we had an informal savings and loan association where members deposit a fixed amount every payday. The collected money is lent to borrowers with interest. At the end of the year the entire amount is distributed. The members receive their invested money plus the dividend.

Only the members can avail of a loan. But non-members can still get a loan if a member will sign as a co-maker. I once signed as a co-maker to a borrower that I consider friend. The loan was paid. Unfortunately for a colleague, a borrower that he signed as co-maker did not pay. The co-maker had to pay back the loan in full plus interest and penalty. That is a neat lesson to me.

There is always a chance when you sign as a co-maker that the actual borrower will snitch and level you repaying the debt but I think in the case of your coworker the bank just threatened him/her so they do not go to court. I heard multiply cases when this happens and in court judge relieved the co-maker from the debt to at least a big part of it