What co-signing a loan means for you
Co-signing means promising to repay someone else's loan if they don't. The lender can come to you first, and the loan counts as your debt even when every payment is on time.
Checked 2026-09-27 · All guides
What you could owe
Enter the loan you're being asked to co-sign. The calculator shows the monthly payment, and what would be left for you to pay if the borrower stopped paying partway through.
Assumes a fixed rate and equal monthly payments. Late fees and collection costs would come on top.
What the law says the lender must tell you
Under the FTC's Credit Practices Rule, the lender must give you a Notice to Cosigner before you sign (some mortgage loans are exempt). In short, it says:
- If the borrower doesn't pay, you will have to, up to the full amount, plus late fees or collection costs.
- The lender can collect from you without first trying to collect from the borrower, using the same methods: suing you or garnishing your wages. (Some states make lenders try the borrower first.)
- If the loan defaults, that can go on your credit record.
A worked example
Your nephew asks you to co-sign a $15,000 car loan at 9% for 60 months. The payment is $311 a month. If he pays for 18 months and then stops, about $11,183 is still owed, and you could be asked for all of it, plus late fees. Even if he never misses a payment, the $311 a month counts as your debt when you apply for a mortgage or a car loan of your own. Co-signing gives you no ownership of the car.
Co-signer, co-borrower or guarantor?
- Co-signer: responsible for the debt, with no ownership of what it buys (FTC).
- Co-borrower (joint borrower): usually shares both the debt and the ownership.
- Guarantor: promises to pay if the borrower doesn't; the exact terms depend on the contract and state law. Lease guarantors usually cover unpaid rent and damages.
The words vary between lenders. Read which one you're signing, and ask the lender what it means for you.
If you do co-sign, protect yourself
From the FTC's advice:
- Ask the lender for the total you might owe if the borrower defaults.
- Ask for the monthly statements, or for the lender to agree in writing to tell you if a payment is missed. Then you can pay a missed installment before it becomes a default.
- Get copies of the loan contract and the Truth in Lending disclosure.
- Check your credit reports regularly.
- Ask whether the loan has a co-signer release option. The lender and the borrower both have to agree to it.
Who can co-sign?
Usually any adult the lender accepts, typically someone with good credit and steady income. The lender decides. If you're asked because the borrower "can't get approved alone", the lender has judged them a risk; you're taking that risk on.
Related
Sources
Sources checked 2026-09-27.
General information, not legal or financial advice. You send every message yourself; we never contact anyone on your behalf.