NEW YORK (CBS 2) — It is not easy for many people to ask friends and family for financial help, but a growing number of online companies are promising to help guarantee loans and leases for people who are unable to do it on their own.
John Diggs told CBS 2’s Maurice Dubois that his credit has had some challenges lately and he needed help when it came to leasing a new apartment.READ MORE: Storm Watch: Officials Hoping To Avoid Repeat Of Ida With Preparations For Nor'easter
“The landlord requested that I get a co-signer,” he explained.
Diggs did not want to go to his family or friends for help, so he paid a company to co-sign for him.
Janna Herron of Bankrate.com explained how the booming new industry works.
“If you default, they pay the landlord the rest of the lease,” she said.
Companies like “We Co-sign,” “Insurent” and “Co-signer.com” will guarantee your lease for a contractual period of time, even if you have bad credit.
The current economy and shaky job market have created even more of a demand for these services.READ MORE: NYPD: Man Shot Inside Union Square Subway Station
Interest rates vary depending on the service, but customers can expect to pay a percentage of their monthly lease or annual loan payment, usually between 6 and 10 percent, to the co-signing company.
“You may have to pay some other fees, such as a sign-up fee, a processing fee, a background check fee, and those could easily add another $100 to $200,” Herron said.
Experts recommend doing thorough research on a company before agreeing to anything.
Diggs said that his experience was a positive one.
“It’s a sense of peace, a sense of warmth that I now have my home, and I’m on my way to re-building and re-establishing my life,” he said.
To find out more about co-signing companies you can check their ratings with the Better Business Bureau.
Have you done business with a co-signing company? Share your experience in our comments section below…MORE NEWS: Exclusive: CBS2 Cameras On Hand At Unannounced Security Screenings At Troubled New York City High Schools