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 of 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 is a Co-Borrower?

Mary McMahon
By
Updated May 16, 2024
Our promise to you
SmartCapitalMind 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 SmartCapitalMind, 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.

A co-borrower is a person who is jointly liable for a loan. This term is sometimes used interchangeably with terms like cosigner and guarantor, but these concepts are actually slightly different under the law. Co-borrowers share full liability for repayment and also have an interest in the property that secures the loan, while cosigners and guarantors only incur liability for the loan in the event that the original borrower defaults and the lender initiates collection proceedings.

A common situation where a co-borrower may be used is a home loan. If a couple buy a house together, both partners can be listed as co-borrowers on the loan. They are jointly liable for the repayment of the loan every month and for any other obligations associated with the debt. Both partners also have an equal share in the home itself. This setup for a loan can also be used for car loans and other types of loans.

When a lender agrees to accept a loan application from co-borrowers, it will expect detailed financial information from both applicants, or all applicants, if there are more than two borrowers. This includes credit history, documentation of income, and any other information that might be relevant to credit eligibility. The bank will evaluate this information to determine how much money it will offer, and what kind of interest rate it can provide.

The advantage of having a co-borrower is that people can qualify for loans that they would not be able to get independently. Co-borrowers can take out more money together because both of their incomes and financial situations are being considered and they may also be able to access a lower interest rate. The disadvantage is that if one person listed on the loan fails to meet obligations, the co-borrower will need to step in, and if the loan is too large for one person to handle, it may enter default.

By contrast with a co-borrower, a cosigner or guarantor agrees to pay a loan if the original borrower defaults. This person is not liable for the loan while it is in repayment and has no interest in the real estate, vehicle, or other property associated with the loan. Having a cosigner doesn't provide access to a bigger loan or a better interest rate, because the cosigner is acting as security, not entering into the loan with the borrower. People with limited or poor credit histories may pursue this option when taking out loans on their own so that lenders will agree to work with them; a common example is a student taking out student loans for the first time.

SmartCapitalMind 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.
Mary McMahon
By Mary McMahon

Ever since she began contributing to the site several years ago, Mary has embraced the exciting challenge of being a SmartCapitalMind researcher and writer. Mary has a liberal arts degree from Goddard College and spends her free time reading, cooking, and exploring the great outdoors.

Discussion Comments
Mary McMahon
Mary McMahon

Ever since she began contributing to the site several years ago, Mary has embraced the exciting challenge of being a...

Learn more
SmartCapitalMind, in your inbox

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

SmartCapitalMind, in your inbox

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