A cosigner, also known as a comaker, is an individual who agrees to take joint responsibility for a loan or credit agreement alongside the primary borrower. This person acts as a guarantor, meaning they promise to repay the debt if the primary borrower defaults. Cosigners are often required when the borrower has insufficient credit history or a low credit score, as their presence can help secure the loan.
The term "cosigner" is commonly used in various legal contexts, particularly in finance and lending. It is relevant in:
In these scenarios, cosigners help individuals who may not qualify for a loan on their own due to poor credit or lack of income. Users can manage these agreements through legal forms available from platforms like US Legal Forms, which provide templates drafted by attorneys.
Here are a couple of examples of abatement:
Example 1: A college student applies for a student loan but has no credit history. Their parent agrees to be a cosigner, allowing the student to secure the loan.
Example 2: A couple wants to buy their first home, but one partner has a low credit score. The other partner's parent cosigns the mortgage, helping them qualify for better loan terms. (hypothetical example)
Examples of state differences (not exhaustive):
| State | Cosigner Requirements |
|---|---|
| California | Cosigner must be a resident of California. |
| Texas | Cosigner can be a non-resident but must have a valid Social Security number. |
| New York | Cosigner must provide proof of income and creditworthiness. |
This is not a complete list. State laws vary, and users should consult local rules for specific guidance.
| Term | Definition | Key Differences |
|---|---|---|
| Cosigner | Jointly responsible for a loan with the primary borrower. | Shares liability; often needed for credit support. |
| Guarantor | Promises to pay if the borrower defaults but is not a co-borrower. | Does not share liability unless the borrower defaults. |
| Co-borrower | Shares equal responsibility for the loan and ownership of the asset. | Both parties are equally liable and have rights to the asset. |
If you are considering becoming a cosigner or need one for a loan, follow these steps:
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The cosigner is responsible for repaying the loan, which can impact their credit score.