We are independent & ad-supported. We may earn a commission for purchases made through our links.

Advertiser Disclosure

Our website is an independent, advertising-supported platform. We provide our content free of charge to our readers, and to keep it that way, we rely on revenue generated through advertisements and affiliate partnerships. This means that when you click on certain links on our site and make a purchase, we may earn a commission. Learn more.

How We Make Money

We sustain our operations through affiliate commissions and advertising. If you click on an affiliate link and make a purchase, we may receive a commission from the merchant at no additional cost to you. We also display advertisements on our website, which help generate revenue to support our work and keep our content free for readers. Our editorial team operates independently from our advertising and affiliate partnerships to ensure that our content remains unbiased and focused on providing you with the best information and recommendations based on thorough research and honest evaluations. To remain transparent, we’ve provided a list of our current affiliate partners here.

What Are the Pros and Cons of Co-Signing Loans?

Lainie Petersen
By Lainie Petersen
Updated May 17, 2024
Our promise to you
WiseGEEK is dedicated to creating trustworthy, high-quality content that always prioritizes transparency, integrity, and inclusivity above all else. Our ensure that our content creation and review process includes rigorous fact-checking, evidence-based, and continual updates to ensure accuracy and reliability.

Our Promise to you

Founded in 2002, our company has been a trusted resource for readers seeking informative and engaging content. Our dedication to quality remains unwavering—and will never change. We follow a strict editorial policy, ensuring that our content is authored by highly qualified professionals and edited by subject matter experts. This guarantees that everything we publish is objective, accurate, and trustworthy.

Over the years, we've refined our approach to cover a wide range of topics, providing readers with reliable and practical advice to enhance their knowledge and skills. That's why millions of readers turn to us each year. Join us in celebrating the joy of learning, guided by standards you can trust.

Editorial Standards

At WiseGEEK, we are committed to creating content that you can trust. Our editorial process is designed to ensure that every piece of content we publish is accurate, reliable, and informative.

Our team of experienced writers and editors follows a strict set of guidelines to ensure the highest quality content. We conduct thorough research, fact-check all information, and rely on credible sources to back up our claims. Our content is reviewed by subject matter experts to ensure accuracy and clarity.

We believe in transparency and maintain editorial independence from our advertisers. Our team does not receive direct compensation from advertisers, allowing us to create unbiased content that prioritizes your interests.

Co-signing loans can have significant implications, both positive and negative, for the co-signer. A co-signer bears responsibility for the loan's repayment if the primary borrower fails to make timely payments, which may require him to pay the balance of the loan with little recourse for getting his money back from the primary borrower. In addition, if the borrower defaults on the loan, the co-signer's credit standing may be at risk. By cosigning a loan, a person can also assist a friend or family member financially without actually having to use her own money to do so.

For many people, co-signing loans is risky business. By acting as guarantor, a co-signer risks liability for loan repayment, even though he does not receive any benefit from the borrowed money. In many cases, a co-signed loan is needed because a borrower does not have sufficient assets or credit to obtain a loan on her own. While in some cases the borrower's financial situation may simply be the result of being young, not having a high income, or simply not having been able to establish a strong credit history, there are occasions in which a co-signer is required because the borrower has a history of making poor financial decisions. In such situations, co-signing loans presents a significant gamble for the co-signer, as there is no guarantee that the borrower will demonstrate financial responsibility, particularly when he has not done so in the past.

The consequences of a loan default on the part of the borrower can be devastating for a co-signer. Not only may the lender seek repayment from the co-signer, but the lender can report the default to credit reporting agencies, damaging the co-signer's credit. If the co-signer fails to make good on the loan, the lender can take him to court.

On the other hand, co-signing loans can be a positive way for people to assist members of their family and social circle in achieving their financial goals. There are instances in which individuals would like to assist friends and family but do not have the assets to directly loan them the funds. As a loan co-signer, a person can provide financial assistance without having substantial assets or dipping into her savings. Another positive aspect of co-signing a loan is that the loan may appear on the co-signer's credit report. If the borrower fulfills his obligation and makes his loan payments on time, the co-signer's credit can actually improve.

WiseGEEK is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.

Discussion Comments

WiseGEEK, in your inbox

Our latest articles, guides, and more, delivered daily.

WiseGEEK, in your inbox

Our latest articles, guides, and more, delivered daily.