Grace Enfield, Content Writer
A cosigner for a loan is a person who pledges to help you repay a loan, such as a personal loan or a car loan, if you are unable to. Having a well-qualified cosigner will help your chances of getting approved for a loan, as it reassures the lender that the loan will be repaid.
Who Can Be a Personal Loan Cosigner?
You should have someone you trust be your loan cosigner. This could be a parent, guardian, significant other or sibling, for example. They just need to be financially capable of cosigning the loan.
You should know that there are some risks to getting or being a cosigner, though.
Risks of Getting a Cosigner for a Loan
- The cosigner is responsible for repaying the loan if you can’t. If you are unable to make the monthly payments, your cosigner will be responsible for picking up the payments. The cosigner needs to make sure that they understand the financial risk before they cosign the loan.
- Late or missed payments affect both your credit score and your cosigner’s credit score. If you miss payments, both of your credit scores will be negatively affected since you share responsibility for the loan. A record of a late payment may stay on your credit report for 7 years.
- The lender can sue the cosigner. If the cosigner is unable to repay the loan, the lender may sue for nonpayment. The cosigner may also be responsible for attorney’s fees and other legal fees.
- Removing a cosigner isn’t easy. The best way to remove a cosigner is to get a loan release, but not all lenders offer them.
If you’re interested in getting a loan with a cosigner, check out WalletHub’s picks for the best personal loans with a cosigner. Then, you can estimate your rates with the free pre-qualification tool on WalletHub.
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