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Ages 10+ · Money · Credit and loans
Co-signing: a big promise
Tomas needs ahelperRosa co-signsBoth names onone loanRosa pays ifTomas cannot
Co-signing in four steps.
The big ideaA co-signer promises to pay if the borrower cannot. It is a big promise.

How it works

Tomas wanted a boat that cost 12 coins, but his book was blank, since this was a first loan. Mr. Fenn said he would lend if someone with a tidy book helped.

To co-sign is to sign the same loan: two names on one paper. The second name promises that if the first cannot pay, the second will.

That is a big promise, so a helper asks, could I pay all of it? The loan sits on both pages, and every payment, on time or late, shows on both.

When a storm stopped Tomas paying in month three, the bank turned to Rosa, and she paid. Tomas paid her back in month four. A kind no is okay too.

Month 1: Tomas3Month 2: Tomas3Month 3: Rosa 3Month 4: Tomas3
Who paid each month. 3 + 3 + 3 + 3 = 12, the whole boat.
Tomas, the borrower• Gets the boat• Pays each month first• Has the loan on his pageRosa, the co-signer• Promises to pay if he cannot• The bank can ask her for coins• Has the loan on her page
The borrower and the co-signer.

Example 1: Four payments

  1. The boat costs 12 coins.
  2. Tomas pays 3 coins a month.
  3. 3 × 4 = 12, so the loan takes four months.

Example 2: The storm month

  1. In month three a storm keeps every boat in the harbor.
  2. No fish means no coins, so Tomas cannot pay.
  3. The bank asks Rosa, and she pays the 3 coins before the due day.

Example 3: Paying Rosa back

  1. In month four the sea is calm.
  2. Tomas pays the last 3 coins.
  3. Then he pays Rosa back what she covered, with a pie for thanks.

Example 4: A kind no

  1. Rosa could have said no.
  2. That would have been fine too.
  3. Tomas could save longer or choose a smaller boat.

Words to know

co-signer
A second name on a loan who promises to pay if the first cannot.
borrower
The person who gets the loan and pays first.
promise
Saying you will do something. A co-signer's promise is real.
record
The page at the Record House that shows every payment.

Watch out

Try it

  1. The boat costs 12 and Tomas pays 3 a month. How many months?
  2. What does a co-signer promise?
  3. What should a helper ask herself first?
  4. In month three, who paid, and how many coins?
Answers: 1. 4 · 2. To pay if the borrower cannot · 3. Could I pay all of it if I had to? · 4. Rosa paid 3 coins
Try at homeWith a grown-up, talk about what a person should think about before promising to help someone with money. Why is a kind no sometimes the helpful answer?
For grown-upsA made-up village and pretend coins. The question to keep is: could I pay all of it if I had to? Nothing here is advice about any real loan.
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