Damn If You Do and Damn If You Don't

"A man devoid of understanding shakes hands in a pledge, and becomes surety for his friend." Proverbs 17:18 (NKJV)

Juan applied for a loan in one of the financial institutions in the United Arab Emirates. As practiced, before the financial crisis, most financial institutions are lending at 10 to 20 times ones salary. As long as you have your payslip and your employer's certification you can avail of the loan. One more intriguing requirement to be submitted is a co-signatory of the loan.

Since Juan is now ready with the documentary requirements showing proof of employment and salary, he approached Pedro as his co-signor. Pedro, being a close friend of Juan openly agreed to become a co-signor or a surety to the loan applied for by Juan.

Many can relate to the aforesaid story. One could relate to either Juan or Pedro. And this piece is mainly dedicated to that of Pedro's case.

Statistics show that more often than not, the co-signor or the surety ends up paying for the loan of the principal. Financial institutions knew it as a statistical fact, thereby requiring somebody who will end up as a sacrificial lamb.

In the story of Juan and Pedro above, the latter had two options. He could say yes or no. If he says yes, then he could be included as part of the statistics and if it so happens, what do you think would happen to the relationship of the two gentlemen? It is simply ruined.

If Pedro says no, two things could happen. First, Juan's loan application would be denied outright unless he could look for another co-signor. Secondly, because of the denial by Pedro, the relationship would no longer be the same again. It would be strained as a logical consequence to Pedro's refusal to become a co-signor.

It seemed that, if one will put himself in the shoes of Pedro, he could be in a situation of damn if you do and damn if you don't. Either way, the relationship will never be the same again if you refuse to become a surety. And when you accepted to become a surety that later on turned out to be paying the principal's obligations, the relationship is ruined.

That explains why the Bible in Proverbs described a person who enters into becoming a surety as devoid of understanding. It is not only that he is inviting himself to become one of the statistics, but allowing a friend avail of a loan where he may not have the capacity to pay. In most cases, these loans are just spent unwisely.

The wisest thing to do then is to never co-sign a loan. Never. Never. Never...