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Last Updated April 2026
- A co-signer is someone who agrees to repay a loan or lease if the borrower can’t.
- Co-signing a loan or lease can affect credit scores for the borrower and co-signer, because the debt and payment histories appear on both credit reports.
- Lenders may ask for a co-signer when a borrower has limited credit history, a lower credit score or insufficient income.
- Adding a co-signer with a strong financial profile can help you win approval for your car loan or lease application.
If you’re taking out a car loan or leasing an apartment and lack the needed credit history or income, a co-signer can sign your loan or lease agreement too, adding their financial backing. A co-signer agrees to share legal responsibility for the loan and make payments if you stop paying. A co-signed loan appears on credit reports for both the borrower and the co-signer.
What does it mean to be a co-signer?
Being a co-signer means agreeing to share legal responsibility for someone else’s loan. Lenders sometimes request a co-signer when a borrower doesn’t meet lending requirements on their own — often a young person starting out or someone with limited finances. The upside for the lender is the added confidence that they’ll be repaid. The upside for the borrower is the opportunity to build credit by making payments on time. But if the borrower misses payments or defaults on the loan, the co-signer will be responsible for repaying the debt.
Situations that might require a co-signer
Co-signers are often required for young people who are buying their first car, taking out student loans , renting a first apartment or even buying a first home. A co-signer with stronger credit or income can help strengthen the lSuoan or lease application and reassure the lender or landlord that they’ll still be paid if the borrower runs into financial trouble.
A borrower may need a co-signer if they:
- Have limited credit history (for example, a student or first-time borrower)
- Have a lower credit score, sometimes because of past problems paying back a loan
- Have a high debt-to-income ratio
- Do not yet have enough income or financial history to qualify alone
Being a co-signer is different from being a guarantor or co-borrower:
- A guarantor also agrees to repay a loan if the borrower cannot. But the lender may first attempt to collect from the borrower before pursuing the guarantor. In some lending arrangements, a guarantor’s obligation is considered secondary to the borrower’s.
- A co-borrower shares equal responsibility for the loan from the beginning. Both borrowers typically apply for the loan together, can both access the loan funds and are both responsible for making payments.
Understanding loan roles
| Role | What it means | Responsible for repayment? | Access to loan funds? | Impact on credit report/score? |
|---|---|---|---|---|
| Primary borrower | The person receiving and using the loan | Yes | Yes | Yes |
| Co-signer | Signs the loan with the borrower and shares responsibility for repayment from the start | Yes | Usually no | Yes |
| Co-borrower | Applies jointly and shares the loan equally | Yes | Yes | Yes |
| Guarantor | Promises to repay the loan only if the borrower defaults | Lender may attempt collection from the borrower first, then may pursue guarantor | No | Depends on the lender and how the guarantor is formally listed on the credit account |
Role: Primary borrower
- What it means: The person receiving and using the loan
- Responsible for repayment?: Yes
- Access to loan funds?: Yes
- Impact on credit report/score?: Yes
Role: Co-signer
- What it means: Signs the loan with the borrower and shares responsibility for repayment from the start
- Responsible for repayment?: Yes
- Access to loan funds?: Usually no
- Impact on credit report/score?: Yes
Role: Co-borrower
- What it means: Applies jointly and shares the loan equally
- Responsible for repayment?: Yes
- Access to loan funds?: Yes
- Impact on credit report/score?: Yes
Role: Guarantor
- What it means: Promises to repay the loan only if the borrower defaults
- Responsible for repayment?: Lender may attempt collection from the borrower first, then may pursue guarantor
- Access to loan funds?: No
- Impact on credit report/score?: Depends on the lender and how the guarantor is formally listed on the credit account
Risks and responsibilities of a co-signer
A co-signer’s primary responsibility is to cover missed loan payments or repay the loan balance if the loan goes into default. But there can be other impacts, too.
- Credit score. A co-signed loan usually appears on the credit reports of both the borrower and the co-signer. Missed payments or delinquency may negatively affect both credit scores, which can make it harder for the co-signer to borrow in the future.
- Debt-to-income ratio. The loan may also count toward the co-signer’s total debt obligations, especially in relation to income, which lenders may consider when evaluating applications for other credit.
The benefits of having a co-signer
- Credit. Paying off a co-signed loan lets the borrower establish, build or rebuild their credit score, making it easier for them to qualify for a loan on their own in the future. A strong credit score may also positively affect car insurance rates.
- Loan terms: Having a co-signer means a stronger loan application, and that may lead to better loan terms, a lower interest rate or more flexible repayment terms. Lower borrowing costs can help make monthly payments more manageable and reduce the total amount paid over the life of the loan.
Things to consider before co-signing a loan
How will the loan be handled?
Clear communication between the borrower and the co-signer can help both parties understand their responsibilities before signing a loan agreement and head off future conflict. Among topics to discuss:
- How payments will be made
- What might happen if financial circumstances change
- How both parties will stay informed about the loan
Can the borrower afford the loan?
Review the borrower’s income, existing debts and ability to make regular payments.
Can the co-signer afford to take over loan payments?
If you’re considering co-signing, take a good hard look at how taking over loan payments would affect your overall finances and goals for the future.
Could a relationship be affected?
Often the co-signer is a parent, relative or friend whose relationship with the borrower might change as a result of sharing responsibility for a loan if the borrower fails to make payments.
Can the co-signer be removed from a loan?
Once you co-sign, it can be difficult to remove your name from the loan. Depending on the lender and the loan terms, removing a co-signer may require refinancing the loan or meeting certain repayment conditions. Co-signing is often considered a commitment for the life of the loan.
What happens if the borrower doesn’t pay?
Borrower misses payment
Lender may report late payment to credit bureaus
Late payment may affect both borrower’s and co-signer’s credit reports
Lender contacts borrower and co-signer about overdue balance
If payments continue to be missed, the lender may pursue repayment from either party
The information contained in this page is provided for general informational purposes only. Read our editorial standards for Insurance Questions and other content. We make no representations or warranties of any kind, express or implied. This does not refer to any specific insurance policy and nothing herein is intended to replace or modify any terms in your actual policy.
Farmers may also provide information on topics that are not directly about insurance policies or coverage that we believe could be helpful to you. Information in such articles is not meant as professional advice, and any reliance you place on such information is therefore strictly at your own risk.
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