Cosign

DEFINITION of 'Cosign'

The act of signing for another person's debt which involves a legal obligation made by the cosigner to make payment on the other person's debt should that person default. Having a cosigner is way for individuals with a low income or poor/limited credit history to obtain financing.

This term is also commonly spelled "co-sign".

BREAKING DOWN 'Cosign'

A cosigner's obligation to repay debt arises only after the borrower has defaulted on the loan; however, cosigning a loan is not without risk. A person cosigning a loan should be comfortable with the borrower's ability to repay the debt.

RELATED TERMS
  1. Credit Rating

    An assessment of the creditworthiness of a borrower in general ...
  2. Accommodation Endorser

    An entity or person who agrees to back the credit obligations ...
  3. Subprime Loan

    A type of loan that is offered at a rate above prime to individuals ...
  4. Mortgagor

    An individual or company who borrows money to purchase a piece ...
  5. Credit Risk

    The risk of loss of principal or loss of a financial reward stemming ...
  6. Impaired Credit

    A deterioration in the creditworthiness of an individual or entity. ...
Related Articles
  1. Entrepreneurship

    5 Tips to Improve Your Business' Credit

    Use these five essential tips to build up the solid credit history that your business needs before you seek out a business loan.
  2. Budgeting

    5 Things You Shouldn't Do During A Recession

    These tips can help you avoid financial risk, and are especially important during an economic slowdown.
  3. Home & Auto

    To Rent Or Buy? The Financial Issues

    Thinking of buying a home? We look at the initial and ongoing costs, as well as the so-called benefits.
  4. Credit & Loans

    The Importance Of Your Credit Rating

    A great starting point for learning what a credit score is, how it is calculated and why it is so important.
  5. Credit & Loans

    Digging Out Of Personal Debt

    Find out why good intentions can put consumers in an even bigger hole than before.
  6. Home & Auto

    6 Tips To Get Approved For A Mortgage

    You can change your bank's answer to a loan request from 'No' to 'Yes'. Find out how.
  7. Retirement

    Getting A Loan Without Your Parents

    Use the 5 "W"s to finance your dreams without banking on a second signature.
  8. Options & Futures

    8 Ways To Help Family Members In Financial Trouble

    Find out how to help the ones you love without hurting yourself.
  9. Retirement

    The Indiana Jones Guide To Getting Ahead

    Follow Indy's advice to conquer the obstacles blocking your path to financial well-being.
  10. Options & Futures

    Should Parents Pay For College?

    When federal student loan resources are exhausted, parents and students face tough decisions on how to pay.
RELATED FAQS
  1. Can personal loans be transferred to another person?

    Personal loans cannot be transferred to another person, because these loans are determined based on your unique credit score ... Read Full Answer >>
  2. Are personal loans considered income?

    Personal loans are not considered income for the borrower unless the loan is forgiven. In other words, you cannot be taxed ... Read Full Answer >>
  3. Can personal loans be included in bankruptcy?

    Personal loans from friends, family and employers fall under common categories of debt that can be discharged in the case ... Read Full Answer >>
  4. Are personal loans tax deductible?

    Interest paid on personal loans is not tax deductible. If you take out a loan to buy a car for personal use or to cover other ... Read Full Answer >>
  5. Are personal loans bad for your credit score?

    Taking out a personal loan is not bad for your credit score in and of itself. However, there are several factors that come ... Read Full Answer >>
  6. Can Sallie Mae loans be forgiven?

    Sallie Mae loans, similar to other private loans, cannot be forgiven. As of 2015, there is no option for private student ... Read Full Answer >>
Hot Definitions
  1. Black Swan

    An event or occurrence that deviates beyond what is normally expected of a situation and that would be extremely difficult ...
  2. Inverted Yield Curve

    An interest rate environment in which long-term debt instruments have a lower yield than short-term debt instruments of the ...
  3. Socially Responsible Investment - SRI

    An investment that is considered socially responsible because of the nature of the business the company conducts. Common ...
  4. Presidential Election Cycle (Theory)

    A theory developed by Yale Hirsch that states that U.S. stock markets are weakest in the year following the election of a ...
  5. Super Bowl Indicator

    An indicator based on the belief that a Super Bowl win for a team from the old AFL (AFC division) foretells a decline in ...
Trading Center