Is it appropriate for Christians to cosign loans?

Definition and Context of Cosigning

Cosigning refers to agreeing, in writing, to take responsibility for someone else’s debt if that individual defaults on a loan or fails to meet repayment obligations. In financial terms, a cosigner becomes a secondary borrower, stepping in to ensure the debt is repaid. This arrangement can be appealing when a friend or family member has difficulty obtaining a loan independently due to limited credit history or other factors. However, Scripture offers principles regarding money, debt, and communal obligations that guide how believers might approach cosigning.

Scriptural Foundations on Debt and Surety

The practice commonly referenced in biblical literature as “putting up security” or “shaking hands in pledge” is analogous to what is known today as cosigning. The Book of Proverbs repeatedly warns of entering such agreements too casually:

• “My son, if you have put up security for your neighbor, if you have shaken hands in pledge with a stranger…” (Proverbs 6:1).

• “He who puts up security for a stranger will surely suffer, but the one who hates indebtedness is secure.” (Proverbs 11:15).

• “A man lacking judgment shakes hands in pledge and puts up security for his neighbor.” (Proverbs 17:18).

These verses do not condemn providing assistance in all circumstances; they do, however, caution against hastily taking on liability for another person’s financial obligations.

The Principle of Wise Stewardship

Scripture encourages a posture of wisdom and careful stewardship over financial matters. One of the often-cited sayings comes later in Proverbs:

“Do not be one who shakes hands in pledge or puts up security for debts. If you have no money to pay, even your bed will be taken from under you.” (Proverbs 22:26–27)

The warning is clear: those who guarantee another’s debt risk their own resources if the borrower defaults. Concurrently, believers are called to handle their resources responsibly (cf. 1 Timothy 5:8) and to “owe no one anything, except to love one another” (cf. Romans 13:8). This leaves room for moderation, generosity, and concern for the welfare of others, while maintaining a balanced approach to avoid financial entanglements that lead to undue hardship.

Balancing Generosity with Prudence

Scripture teaches principles of generosity (e.g., 2 Corinthians 9:7) and caring for those in genuine need (James 2:14–17). At the same time, biblical wisdom insists that helping others should not be done recklessly or without counting the cost (Luke 14:28). Cosigning a loan can be a loving neighborly act under certain well-evaluated conditions, such as truly knowing the borrower’s character, ability to repay, and the specific circumstances where assistance is justified and prudent.

Moral and Relational Implications

When believers cosign, they place a degree of trust in the borrower’s integrity and financial discipline. If the borrower fails to pay, tension and conflict may arise, potentially harming a friendship or family relationship. The Bible’s emphasis on unity and peace within the community (Ephesians 4:3) suggests that taking on such financial risk for another person necessitates serious forethought and prayer.

Historical and Practical Observations

Archaeological and historical studies of the ancient Near East reveal that public pledges and obligations could be ruinous if a debtor defaulted. The biblical writers, familiar with these real-life consequences, emphasized caution. Today’s legal systems function similarly: once you cosign, the lender can hold you legally responsible for the debt. Modern financial analysts echo Proverbs’ exhortations, warning of the potential damage to personal credit if the primary borrower defaults.

Points to Consider Before Cosigning

1. Personal Financial Stability: Ensure that you are not jeopardizing your own household or obligations.

2. Character of the Borrower: Evaluate the individual’s financial habits, integrity, and track record of repaying debts.

3. Motivation and Relationship: Reflect on why the borrower needs your support and whether this step fosters responsible stewardship for both parties.

4. Ability to Absorb the Debt: Prepare for the possibility that you might have to repay the entire amount should the borrower fail.

5. Biblical Counsel and Prayer: Seek godly advice from mentors or church leaders and pray for discernment (James 1:5).

Conclusion

Scripture’s primary teaching on cosigning—referred to in biblical language as guaranteeing someone else’s debt—centers on the importance of wisdom and caution. The proverbs underscore the risks, highlighting the potential for hardship if the borrower is unable to fulfill repayment responsibilities. At the same time, believers are called to act in love and generosity, aiding others when it is prudent and possible.

Deciding whether to cosign should involve prayer, thoughtful counsel, and a clear-eyed assessment of one’s capacity to shoulder the financial burden if things do not go as intended. In situations where cosigning aligns with wise stewardship and genuinely helps another without inviting reckless risk, it may be appropriate. However, if these conditions are not met and red flags appear, Scripture advises great caution in assuming another’s debt.