In recent years, borrowing money has become more common. According to CNN reporter Megan DeMatteo (2021), “the average American has $90,460 in debt, this includes all types of consumer debt products, from credit cards to personal loans, mortgages and student debt.” Borrowing money is often necessary to go to college, get a car, home, or things we need to survive. Many parents get personal loans when they cannot afford to get their children Christmas presents. However, when someone borrows an excessive amount of money and loses their job, they may be unable to pay their loans back. Their home or car may be repossessed or foreclosed if they cannot make payments for several months, and they could lose the money they have invested in the purchase. Another consequence of borrowing is that your spouse will be responsible for any debt you left behind.
If someone does not have good credit, they may need a friend or family member to co-sign a loan for them. When co-signing a loan for someone, you are guaranteeing the lender that you will pay the loan back if the borrower does not. The co-signer has to have good credit and enough income to show the lender that they have the means to pay the loan and have paid their debt on time in the past. Proverbs 22:26-27 (Biblica,2011) warns us not to put up securities for our neighbor, and if we do, we should ask our neighbor to void the contract as soon as possible. It tells us to be “to the point of exhaustion— and give your neighbor no rest! (Biblica)”
Luke 14:28 (Biblica, 2011) tells us, “Suppose one of you wants to build a tower. Won’t you first sit down and estimate the cost to see if you have enough money to complete it?” We need to be financially responsible and only buy things we can afford or save up for it.
The Bible deems debt as something that we should avoid. However, sometimes we will need to take out loans for big purchases like household appliances, cars, homes, and student loans. Having debt comes with some risk and can be expensive because Finance and credit card companies add interest and fees. They require payments to be made on-time payments and most likely will charge more for late payments, DeMatteo, 2021). It is crucial to take only loans that you can pay back because only “the wicked borrow and do not repay (Biblica, Psalms 37:21).”
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Borrowing money is not as black and white as it seems. When one borrows money, they are obtaining a loan whether it’s personal or a business. There are long term consequences that affects one’s future and the endeavors that they wish to fulfill. When a person takes out a loan it is because they need the money no matter if it is a large or small amount. Once you take out a loan you must think about the repayment plan, continuing to pay other bills, and limited funds for other activities. These consequences may become a burden if one cannot efficiently execute a plan to aid in getting them on track or ahead. We should not get ahead of ourselves because we have the extra funds but continue to strive for better. Proverbs 27:1 says, “Boast not thyself of tomorrow; for thou knowest not what a day may bring forth” (KJV, 1993). As a borrower one has the obligation of repaying every cent that they borrow. Receiving a loan is a contract that you cannot breach, especially if you want to have a successful future. “The complex nature of financial services could result in poor price knowledge” (Farias, 2019), which could lead to one needing a cosigner.
A co-signer is a person who adds themselves on a contract with a borrower so they may be accepted for a loan. Being a co-signer can transfer the burden of debt from the original signer to the cosigner if the original signer does not satisfy the debt as the creditor sees fit. Simply, the cosigner becomes responsible for another person’s debt if that person does not fulfill the contract. Is it wise to be a cosigner? The Bible says no. Proverbs 17:18 tells us that, “A man lacking in sense pledges and becomes guarantor in the presence of his neighbor”(NASB, 1995). The Bible speaks on the dangers, irresponsibility, and suffering that being a cosigner can cause. Jean Chatzky wrote in her 2016 article, Money Saver, “A new survey from CreditCards.com shows that 38 percent of cosigners lost money because the primary borrower whiffed, 28 percent saw their credit score drop, and 26 percent said their relationship with the primary borrower soured”. These statistics show that being a cosigner is not the best option to choose. You may feel bad for a person not being able to be approved by themselves but being a cosigner can put you in a compromising position.
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