If your twenty-something son applies for a big automobile loan, the mean-spirited and fun-hating loan officer might deny the application because your son doesn’t have an established credit history and because your son’s job at the local hamburger stand doesn’t seem profitable enough to make payments on a brand new Corvette. Your son will subsequently explain to you that he can obtain that beautiful sports car if you can just take five minutes and sign a piece of paper. In fact, your well-meaning son is trying to talk you into cosigning on the automobile loan.
The act of signing for another person’s debt makes you legally obligated to pay for that debt if the other person should default. The other catch is, just because you cosigned and paid off the debt, you still don’t own the asset purchased with the debt. So if you let your son talk you into being the cosigner, you will make every payment except the first, and he will enjoy that great car all by himself. Thanks dad and mom! On second thought, it looks like your son will be driving the ten-year old Civic until it’s a twenty-year old Civic.