what does it mean to cosign a loan

Best answer

When you co-sign a loan, youpromise to pay off somebody else’s debt if the borrower stops making payments for any reason. This is a generous act, as it can help a friend or family member get approved for a loan that they otherwise wouldn鈥檛 qualify for. But it鈥檚 also risky to guarantee a loan for somebody else.

People also ask

  • What is a co-signer on a loan?

  • When you co-sign a loan, you promise to pay off the loan in the event the primary borrower is unable to pay off the loan. A co-signer becomes necessary when the person applying for the loan doesn’t have sufficient credit history, reliability or income to get the loan on his own.

  • Is co-signing a loan a bad idea?

  • Think twice before you agree to co-sign a loan. Co-signing can put you at real financial risk and seriously damage a relationship. Editorial Note: Credit Karma receives compensation from third-party advertisers, but that doesn鈥檛 affect our editors鈥?opinions.

  • What are the requirements to co-sign on a car loan?

  • First of all, to be eligible to co-sign, you have to have a strong credit score. If you’re able to co-sign, make sure you have an accurate picture of what it will mean to you and your financial situation:

  • What happens when you co sign for a loan?

  • Co-signing reduces the amount of your monthly income that is available to make payments on new loans. Even though you鈥檙e not borrowing鈥攁nd even if you never have to make a single payment on the loans you co-sign for鈥攊t鈥檚 harder for you to qualify for another loan in your own name.

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