One of the biggest differences, however, is that co-borrowers also have a claim to the car. They’ll come to you right away along with the other person if someone doesn’t pay the loan. In other words, you’re not just a backup way to get paid. In the eyes of the lender, however, you’re jointly responsible, with the same payment responsibilities of the other borrower. If you’re a co-borrower on a loan, you’re also still responsible for the loan. Co-Borrowers Are Responsible for the Loan and the Car That’s not necessarily the case if you’re a co-borrower, however. That’s a scary thing to think about if you’re on a cosigned loan, but at least the damage is limited to just your credit history. Even worse, the late payments will be listed on both the daughter’s and the parent’s credit report, potentially ruining both of their credit scores. The lender will come after mom and dad for the money, in that case. For example, if a parent cosigns on a loan for their daughter’s 18th birthday, it’s the daughter who will drive the car and be primarily responsible for payments.īut if she falters and falls behind, then the parents are on the hook to make the payments. That’s usually the person who’s going to use the car, and who has the primary responsibility in paying it off. In a cosigner situation, one borrow is the primary borrower. Cosigners Are Only Responsible for the Loan

For example, in either case, everyone listed on the loan - whether they’re a cosigner or a co-borrower - is ultimately responsible for paying the loan.

They sound similar, and they are in some ways. The first question you’ll have to consider is whether you’re a cosigner, or a co-borrower. See Today's Rates Factor #1: Cosigner, or Co-Borrower?

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