“There’s danger in putting up security for a stranger’s debt; it’s safer not to guarantee another person’s debt.” (Proverbs 11:15 NLT)
The Bible has much to say about money and wisdom for how to work for it, how to spend it, and how not to spend it. Today’s selected verse teaches us not to cosign loans. You may have had someone ask, “Would you co-sign a small loan for me?” They may have even explained that you would not have to pay a cent; just sign a piece of paper; “It’s a favor,” they say. But the Bible teaches that this is not safe.
Why is it unsafe to cosign a loan for someone, even a friend or family member? Because by becoming a cosigner you are now assuming another person’s debt. If that friend or family member fails to pay their debt you will be forced to assume responsibility for that debt as if it were your own.
In an article on this subject Christian money expert Dave Ramsey writes:
The lender requires a cosigner because there is a very high statistical chance that the applicant won't pay. So why do we appoint ourselves as the generous, all-knowing, benevolent helper to override the judgment of an industry that is foaming at the mouth to lend money, and yet has deemed your friend or relative a deadbeat looking for a place to fail, or at least a loan default looking for a new home? Why do we cosign knowing full well the inherent problems?
We enter this ridiculous situation only on emotion. Intellect could not take us on this ride. We "know" they will pay because we "know" them. Wrong. Parents cosign for a young couple to buy a home. Why do they need a cosigner? Because they couldn't afford the home! Parents cosign for a teenager to buy a car. Why would parents do this? "So he can learn to be responsible." No, what the teenager has learned is: if you can't pay for something, buy it anyway.
There was a man who went to the mall with one of his buddies. When they got there, he took out his debit card and handed it to his friend along with a note including his pin number. “Spend as much as you like, it’s on me.” Would anyone ever think of doing such a thing? That is exactly what you are doing if you co-sign a loan for someone else. You are committing all of your wealth to whatever debt that person is assuming (his debt has become yours).
Jesus taught us to ask the Father to “give us this day our daily bread.” He taught us to ask God to provide for our personal needs. I believe God will meet our financial needs as we live wisely and within the parameters of His Word. This does not include taking on unnecessary debt, including that of close friends or family members.
May we be wise today with the money the LORD has given us and the credit we have earned.