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. Joint Liability

    An obligation, including an obligation to repay a debt between ...
  2. Debt Instrument

    A paper or electronic obligation that enables the issuing party ...
  3. Default

    1. The failure to promptly pay interest or principal when due. ...
  4. Downstream Guarantee

    A guarantee placed on a loan on behalf of the borrowing party ...
  5. Signature Loan

    A type of personal loan offered by banks and other finance companies ...
  6. Personal Guarantee

    An individual’s legal promise to repay charges to a business ...
Related Articles
  1. Personal Finance

    Getting Your Name Off A Cosigned Loan

    If your friend or relative has proved to be irresponsible, getting out of the cosigned loan can improve your financial security and options for borrowing.
  2. Personal Finance

    Don't Want a Co-signer? The Top Alternatives

    You need a co-signer to get that loan or apartment, but you don't have anyone you can ask. What can you do instead? And how to decide if it makes sense.
  3. Retirement

    Seniors: Before You Co-sign That Student Loan

    If that loan isn't paid back, you could be on the line for the whole amount, plus penalties.
  4. Managing Wealth

    The Best Way to Help Your Parents Buy a Home

    If your are thinking of assisting your folks with a home purchase, be sure you understand the financial consequences before you make any offers.
  5. Personal Finance

    Here's How to Get a Car With No Down Payment

    Here are some ways that you can buy a car with no down payment while also avoiding higher interest rates.
  6. Personal Finance

    Debt After Death: Do Kids Owe for Parents?

    More and more Americans are dying while in debt. Are children responsible for the debts of their parents? What’s the scoop on parental debt after death?
  7. Personal Finance

    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.
  8. Personal Finance

    Build Your Credit Score

    Here are four good ways to build your credit score when you're starting from scratch. Do it right and you'll end up with excellent credit.
  9. Insurance

    When Is Rent Guarantee Insurance a Good Idea?

    Prospective renters are turning to rent guarantee insurance to boost their chances of getting approved by a landlord or management company. Is it worth it?
RELATED FAQS
  1. What are the advantages of applying for a private student loan with a creditworthy ...

    Discover how adding a creditworthy cosigner to your private student loan application can help you realize more favorable ... Read Answer >>
  2. How are my cosigners affected if I file bankruptcy?

    Learn how cosigners and guarantors are affected by bankruptcy filings and how cosigner treatment changes based on the type ... Read Answer >>
  3. Are Student Loans Forgiven After Death?

    Federal student loans are forgiven when the borrower dies once proof of death is submitted. No money will be owed and the ... Read Answer >>
Trading Center