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Warning
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Simple English definitions for legal terms
cosigner
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A quick definition of cosigner:
A cosigner is someone who agrees to pay back a loan if the person who borrowed the money can't pay it back. This person signs the loan with the borrower and takes equal responsibility for paying it back. Usually, a cosigner is a parent, spouse, or friend who promises to pay the loan if the borrower can't. Having a cosigner can help the borrower get a better interest rate on the loan, but if the borrower doesn't pay back the loan, it can hurt both the borrower and the cosigner's credit score.
A more thorough explanation:
A cosigner is a person who signs a loan with another person (borrower) and agrees to pay the loan if the borrower is not able to repay it. This means that the cosigner is equally responsible for repaying the loan.
For example, if a student wants to take out a loan to pay for college but doesn't have a good credit score, they may ask their parent to cosign the loan. The parent would then be responsible for repaying the loan if the student is unable to do so.
Cosigning can be helpful for both the borrower and the lender. The lender is more likely to approve the loan if there is a cosigner, and the borrower may be able to get a better interest rate. However, if the borrower doesn't make payments on time or defaults on the loan, it can negatively affect both the borrower and the cosigner's credit score.