ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -A co-signer is a person who has agreed to guarantee the debt of another individual but does not receive any of the loan proceeds. They are responsible for the debt if the borrower does not make payments or defaults on the loan entirely.

Detailed explanation-2: -If you cosign a debt and the borrower doesn’t pay, in most every case you will be responsible for the entire debt. And, the lender does not have to try to collect from the borrower. It can look to you even if it might be possible for it to collect from the borrower.

Detailed explanation-3: -A cosigner on a loan is legally responsible for the debt if the primary borrower defaults. Cosigning a loan will show up on your credit report and can impact your credit score if the primary borrower pays late or defaults. Cosigners may sign for student loans, personal loans, credit cards, and even mortgages.

Detailed explanation-4: -What are my responsibilities as a cosigner? Your signature as a co-signer on a mortgage note means you agree to pay off the loan or take over the payments if the borrower stops paying. This can be a big responsibility if you don’t have the financial flexibility to take on the full payment.

Detailed explanation-5: -The truth is that cosigners are required to take on all the same financial and legal responsibility for the loan as you. Even if you plan to pay 100% of the car note by yourself, the lender can hold you both responsible for missed loan payments and late fees.