Thinking about getting a loan but looking for options to get lower interest rate? Both, co-borrowers and co-signers help with the rate and the likelihood to get a loan approved. Yet, there are different situations when co-borrowing is preferred; same with co-signers.

Each type of guarantor has advantages and disadvantages you may want to consider before asking someone to back up your credit in any of this ways.

However, getting a car will be easier if you have somebody who shares the monthly payment or a person who will pay your debt in case you are financially in need.

What is Co-borrowing?

Basically, a person who co-borrows your car loan is somebody that has the same rights on the vehicle and will share the fees with you. It is common to find co-borrowers – or also called joint applicants – in marriage. For instance, many people choose to pay the house together and have ownership on the good.

Consequently, a joint applicant has the same responsibilities and rights over the car, which is pretty much convenient for lenders and payers. Furthermore, if one of them declares bankruptcy, both sides will be exempt of paying the debt – of course this depends on the terms of the lender.

What is Co-signer?

To start, co-signers don’t own the good itself; they only back up the loan of the main signer. Often, lenders ask for co-signers in case the person doesn’t have enough credit score to get the loan or credit history.

Usually co-signers are everyone with good credit score since the lenders are most likely to take into account their history report more than the person that is asking for the loan; that is to say that a co-signer increase the chance to get a loan in case of non-existing score, or even decrease the interest rate.

The bad news for the co-signer is that their credit score will be affected in case the borrower can’t pay the fees; also the co-signer has the obligation of paying the debt.

Difference between Co-signer and Co-borrowing

Put it this way: Co-signer is an individual with no rights on the good, co-borrowing share the vehicle and loan responsibilities. One can be parents with their kids and recent purchases, the other can be a just married couple looking for financing something that would be difficult to pay by their own.

Yet, one of the main differences is that the co-signer is a figure used for borrowers that won’t qualify for a loan. Lenders put their trust on the co-signer over the borrower, so they ensure they will get repay.

Co-borrowers are people that are willing to pay together and own the good in the same measure – they have equal parts. Often, co-borrowers apply for larger loans, yet both need to have fair credit score.


As we mentioned in the difference above both co-signers and co-borrowers assist you on either getting a bigger loan or the loan itself.

The first advantage – more applicable for co-borrowers – is larger loans. Getting a house mortgage bigger amount of money is easier when somebody is sharing the debt with you. Although the additional amount of money borrowers get is not as easy as 2 times what each one of them can afford. The total loan will depend on the debts and credit history.

Conveniently for lenders, co-signers will pay the debt of the borrowers in case they declare bankruptcy. On both sides, this is beneficial to get a loan with bad credit score.

Laura Pájaro is an engineer working as a writer for Hi Lo AutoSales. She likes writing about cars and finances, besides drinking coffee and swimming in the sea.