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A lot of times in the financial world we take risks—with stocks, bonds, loans, etc. But how big of a risk is co-signing a loan for someone? There are many different things to consider before signing any paper work and depending on the person, it may not be that big of a risk.

When you co-sign a loan, this means that you are telling the lender that you are just as responsible as the person who is getting the loan. It also means that if they can not make a payment, the lender will look to you to make that payment. It also means that if the loan is not entirely paid back, the lenders will expect you to pay back all the money. This can be very overwhelming and very unexpected, especially if you are not getting any thing back by paying the money for your friend or family member.

Generally lenders only require a co-signer when a person has little or bad credit. If your friend has had trouble paying back loans in the past, do you think they will have trouble paying it back now? Do you really trust this friend to be able to pay you the money if you end up making payments for them? Make sure that you really know all the details of their credit history before volunteering to cosign for them.

If a person does not pay back their loan, the lenders will generally expect you to start paying back the loan before they take any legal action on your friend. This may also effect your credit score if your friend does not pay back a loan that you have co-signed. Having your name on the account shows the lenders that you have good credit but as soon as it is defaulted on, your credit score can change drastically.

There are a few things you can do to try to prevent a disaster if you do decide to co-sign a loan for someone. Make sure it is someone you really know well and have good communication with. Ask them or the creditor to please contact you when a payment is missed so that you can be aware of it. Take note of the amount of the monthly payments so that you can see if you would be able to afford it if your friend does end up missing a payment. Get copies of all the important documents and read them through thoroughly. You are just as responsible for the loan as your friend is.

Also, make sure you get a copy of the co-signers notice. It is a legal document outlining your role in the loan. It can help you by knowing a lot of the details before signing your name on anything. Co-signing a loan can be risking, but as long as you know the person well and know all the background, you should be fine. Just remember that co-signing a loan is a serious deal and should not be taken lightly.

To put it simply it’s a loan where you lend money to the US government, municipality, a state, or a big company. They use this money to operate all of their functions, pay off debt, etc. This loan has to be repaid to the lender at a predetermined interest rate, and time which is called “maturity”.

The interest rate that the bond will gain is determined by the stability of the company. A good rule of thumb when trying to find out if a company is more stable then the other is the higher the interest rate, the riskier the bond and less stable the company. Of course the more you risk the more potential capital you can make.

One might ask what is the difference between a stock and a bond? With a stock there are no guarantees or promises about dividends or returns. When a company issues a bond the company guarantees to pay back your principle plus interest. When you purchase a bond the price you buy it at or principle is know as its “face value”.

Once you purchase a bond the lender has to hold it to the maturity date, you know exactly how much you are going to get back. For example if you purchase a bond a $2,000 face value, at a ten percent interest rate, and a ten year maturity, you would then collect interest totaling $200 in each of those ten years. When your maturity was up you would then get back your $2000 investment. That is why bond are often referred to as fixed income investments.

Bonds also have another advantage, in some cases they are tax deductible. According to Joshua Kennon, from Your Guide to Investing for Beginners, he says “When a government or Municipality issues various types of bonds to raise money to build bridges, roads, etc. the interest that is earned is tax exempted. This can be especially advantageous with those whom are retired or want to minimize their total tax liability.”

I will now explain corporate bonds because they come in many different varieties. One aspect of corporate bonds has a feature called, a call provision. This allows the company to pay back the face value to the bond holders before maturity. Another aspect of a corporate bond is called convertibles.

They have the ability to convert into shares of common stock. The most common of corporate bonds are called fixed rate bonds. This is where the interest rate paid will never change. Other corporate bonds use floating rates which means the interest rate paid actually changes depending on money markets, treasury bills, etc. These types of rates typically yields lower than those of a fixed rate.

Some corporate bonds are called zero coupons. They make no regular interest payments at all. A zero coupon bond sales at a discount to face value and then is redeemed at maturity for full face value. But regardless of the interest payments and the way that they are structured you invest into the company on one factor only that the bonds are a good investment and you must have faith that the company will repay you.

How Does Anyone Obtain A Loan?

When a person requests a loan, they will fill paper work out that will ask questions in three different categories. They are: what type of capital do you have in backing you for a loan? This is determined by your amount in your bank accounts, and other assets.

Next, they will want to know about your reputation for paying your debts. They will ask for names of other firms or creditors whom you have borrowed from before so they can contact them regarding your past record with them.

And last, they will need to know about your ability to repay the loan. This is usually determined by comparing your income with your current obligations.

The loan officer has to take all three of the above into consideration before giving anyone a loan, rather they are disabled or not. Many disabled individuals are not able to work and support themselves, therefore, would not qualify.

There are other types of disabilities that are not severe enough where the person can work, at least part time, and also might be receiving government funding. Therefore, this person if he or she had a co-signer could most likely qualify for a loan.

Let me share with you a Disability Loan Discharge letter a disabled student received regarding school loans. It goes as follows:

Information on your Student Aid Report indicated that you have had one or more student loans canceled or discharged due to permanent disability. Students having canceled or discharged student loans due to a permanent disability are ineligible to borrow additional loans without proper documentation.

To be eligible to borrow additional Perkins or Direct Loans, you must submit written documentation from your physician that you are able to now engage in “substantial gainful activity” such as employment.

Can Disabled Students Qualify For College Without A Loan?

Yes, and this is great news for the disabled student. In fact, they have wonderful resources and benefits waiting for them. Sources such as: Disabled Students’ Allowances, Access to Learning Fund, Disability Living Allowance and the Incapacity Benefit.

Disabled students receive grants to help them meet the extra costs of studying that students face as a direct result of impairment, a health condition or a specific learning difficulty. The allowances are paid on top of the standard student finance package.

The Incapacity Benefit is a benefit for people who are unable to work because of illness or disability. Your Incapacity Benefit will not be reduced if you receive Disabled Students’ Allowances or any other grant or loan.

Business grants and guaranteed loans for disabled, stand for providing private grants and government guaranteed loans to handicapped individuals, especially students who are suffering from various physical disability.

A disabled person can fulfill his dream if he or she is able to get such business grants and guaranteed loans meant for disabled people. There is a student finance package for disabled student attending institutions for higher education.

This is assessed by the Local Education Department in conjunction with the Student Loans Company. Students can apply for income assessed financial support towards tuition fees and for supplementary grants.

To sum it all up, if you have impairment, medical conditions or a learning difficulty, you most likely are entitled to claim extra financial help as a student. And this is paid on top of anything you get through the standard student finance package.