Know The Difference Between a Cosigner vs Co-Borrower - Loan Trivia


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Monday 5 June 2023

Know The Difference Between a Cosigner vs Co-Borrower

A cosigner has fewer responsibilities and ownership than a co-borrower. The reason is the name of the co-borrower is in the loan agreement, and lenders expect them to repay.

When individuals search for cosigner vs co-borrower, the first difference that shows up is the level of investment in debt.


If the initial borrower does not repay the loan, a cosigner agrees to take on the responsibility of repaying the loan. Cosigners must have better credit and higher income than the primary borrower. Otherwise, the primary borrower would not be able to get approval on the loan application.

For example, a young person may want to get a personal loan to start a business without established credit. The lender may consider the lending risky. In this case, the lender may ask for a cosigner to share the legal obligation to repay.

Risk of cosigners

The cosigners are liable by law for the payment of the outstanding amount which the initial borrower fails to pay.


Co-borrowers are sometimes called co-applicants. A co-borrower is a person who shares the debt repayment obligation with another person. Sharing a loan with a co-borrower means multiple sources of income may lead to repayment. It reassures the lender.

Usually, people who start a business together take out a personal loan as co-borrowers. Both of them work together to repay it. Both benefit from borrowing. You are more likely to receive large loan amounts when you are applying with a co-borrower. It represents less risk to lenders.

Risk of co-borrowers

The biggest risk is that each of the co-borrower is responsible for repaying from the beginning. Any action taken by any co-borrower which affects the debt will affect the other borrower.

The need for a personal loan in your life can arise at any time. When you need funding for any personal expenses, you think of a personal loan. You can avail of the lowest rate personal loan when you have a co-borrower with you, as it sees less risky to the lenders. It is profitable to have a co-borrower rather than a cosigner to get the best personal loan rates. Make sure you calculate the interest amount and EMI with a loan EMI calculator online before signing the loan agreement.

Leading credit institutions provide loans with both the facilities of cosigning and co-borrowing.

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