What does Co-signer mean?
A co-signer is a consumer who signs a type of document in which it is stated that he or she has to pay off the loan of the other consumer signing the same agreement, incase he or she defaults for some reason. Co-signing is a procedure that is used among friends and family very often. The people with good credit usually sign this agreement in order to vouch for a consumer that has no previous loans thus he or she has no reference, and considered a high risk client. Other than consumers with new credit, co-signing is beneficial for those clients who have bad credit as well. If a co-signer is present at the loaning for high risk borrowers, companies are more disposed to approve the loan. This comes at a risk for the co-signer, though, incase the person with low or new credit fails to pay the amount owed, he or she is on the hook for paying the entire sum borrowed.
The person who agrees to sign the document, or otherwise known as the instrument, along with another person or persons, becomes a so-called co-obligor.