You’re responsible with your money and have decent credit. Lets understand the risks and Liability involved in Co-signing and Being an Guarantor on a loan application.
Cosign is to sign together with a borrower to help them get approved for a loan or to get better terms on a loan. If the primary borrower cannot pay back the loan the cosigner will be liable for the debt. Cosigner also own the asset with other borrower for eg. a car cosigner is also the registered owner .
A guarantor is someone who backs up someone taking out a loan and agrees to take over the payments in case the borrower defaults on the loan payments. A guarantor does not own the asset for eg. car loan guarantor is not registered owner of vehicle.
Questions to Ask Before Agreeing to Become a Guarantor
If the borrower is unable or unwilling to fulfill their obligations and promise to repay the loan. Given the potential risk, it is important for anyone who is considering becoming a guarantor/cosigner to ask a number of questions first, including the following: