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What s the difference between a cosigner and a co-borrower
Cosigner responsibilities
Paying back the debt
Gather the right information and documents to apply
Cosigner credit score may be affected
Cosigner rights
You don t own the property
Unfortunately, You can face collections before the primary borrower
The cosigner can be removed from the loan in some cases
Depending on the lender, the borrower may be able to release you from the loan using a form called a cosigner release. What should you consider before becoming a cosigner
The type of loan you re cosigning for
Your financial situation
Your relationship with the primary borrower
The long-term rewards of being a cosigner
If you’re cosigning a loan to help your child go to college or build up credit early on, then the risk may be worth it in the long run. If you’re simply helping a friend pay off credit card debt or buy a car that’s outside of their price range, it’s probably not the best move for you or for them.
Lender APR Loan terms Mariner Finance 18.99% to 35.99% 1 to 5 years Laurel Road 7% to 24.50% (with autopay) 3 to 5 years SoFi 7.99% to 23.43% 2 to 7 years LendingStream 5.73% to 19.99% 2 to 7 years LendingClub 6.34% to 35.89%3 to 5 years Upgrade 7.46% to 35.97% 2 to 7 years The bottom line
At the end of the day, it’s important to remember what’s on the line. Though cosigning could improve your credit if the primary borrower stays current on their payments, there are also a number of risks to consider. Cosigning a loan could not only threaten your credit score, but also impact your financial prospects for many years. Take into account the full scope of your liabilities, risks and rewards before agreeing to be a cosigner. Frequently asked questions
Can being a cosigner hurt your credit
Yes, being a cosigner for someone else’s loan can hurt your credit. To begin with, the loan will show up on your credit report. In addition, if you want to apply for a loan of your own at some point, the outstanding debt associated with the loan for which you are a co-signer will have ramifications for your loan application. Can a cosigner get out of a loan
Yes, it is possible to get out of a loan if the primary borrower agrees to a cosigner release. All lenders have different criteria for cosigner release, but in general, the borrower will have to demonstrate that they have the credit or repayment history needed to qualify for the loan on their own. Can I remove a cosigner without refinancing
It is possible to remove a cosigner without refinancing. However, in most cases, the lender will likely require the borrower to refinance the loan anyway. This is because it’s unlikely that the borrower would qualify for the same rate and terms without the cosigner, Marlowe says. Learn more
SHARE: Aly J. Yale Aylea Wilkins is an editor specializing in personal and home equity loans. She has previously worked for Bankrate editing content about auto, home and life insurance. She has been editing professionally for nearly a decade in a variety of fields with a primary focus on helping people make financial and purchasing decisions with confidence by providing clear and unbiased information. Related Articles