Have anyone asked you to cosign a loan with them? Especially if this is their first loan, the financial institution is likely to ask them for a cosigner, such as their parents. However, cosigning a loan with anyone carries responsibilities.

It's crucial for your own financial health to understand what your part in the loan could amount to.

If you're thinking about becoming a cosigner, consider these tips:

1. Evaluate why you want to cosign.
If you're cosigning a loan out of guilt or an obligation, then these aren't the best circumstances for serious financial decisions.

• You may be tempted to help a family member or friend, but cosigning a loan is a big responsibility. If this person defaults on the loan, then you may be responsible for the entire amount.
• You're putting the relationship at risk by signing a loan because things may not turn out the way you expect.

2. Understand the default consequences.
If the person who is asking you to cosign can't make the payments, then you...