What does it mean to have a co-signer on a loan?

Having a co-signer on a loan means that the co-signer takes on the legal obligation to repay the loan if the primary borrower fails to do so. This arrangement provides the lender with added security, as they can pursue the co-signer for repayment in case the primary borrower defaults.

Co-signers are often involved in situations where the primary borrower might have a limited credit history or a lower credit score, making it difficult for them to secure the loan on their own. By requesting a co-signer, the borrower leverages the co-signer's creditworthiness, giving the lender more assurance regarding the likelihood of repayment.

This role is crucial because it emphasizes the responsibility that co-signers undertake; they are fully accountable for the loan’s repayment, just as much as the primary borrower. If the primary borrower defaults, the co-signer's credit will also be impacted, which underscores the serious commitment involved in co-signing.