How cosign works and how to remove cosigner’s?

What Is Cosign?

To cosign is to sign jointly with a borrower for a loan. A cosigner takes on the legal obligation to be a backup repayment source for the loan and, as such, reduces the risk for the lender and helps the borrower obtain a loan.


  • To cosign is to sign together with a borrower to help them get approved for a loan or to get better terms on a loan.
  • As cosigning is a type of joint credit, the creditworthiness of both signers is evaluated when approving the loan and its terms.
  • In a cosigning arrangement, the primary borrower will receive the loan and be responsible for payments.
  • If the primary borrower cannot pay back the loan, the cosigner will then become liable for the debt.
  • Co-borrowing is similar to cosigning, except that both individuals receive the loan and are liable for monthly payments.


Understanding Cosign

Cosigning is an option that lenders will often allow for a variety of loans. It is considered a type of joint credit that is associated with either a cosigner or co-borrowing agreement. Cosigning can be a benefit for borrowers with low income or minimal credit history. Adding a cosigner can also improve the terms on a loan or increase the principal that a borrower is approved for.

How Cosigning Works

In a credit application with a cosigner, a lender will require information on both the cosigner and the primary borrower. Both individuals will have to provide personal information that allows the lender to do a credit check. The underwriting decision and terms on a cosigned loan will be based on the profiles of both the cosigner and the borrower. (when credit checks go through your credit profile then what happens? Click here for that information  )

If a loan is approved by a cosigner then standard procedures will apply. The lender will prepare a loan contract that details the terms of the loan, including the interest rate and monthly payment schedule. Both the cosigner and the primary borrower must sign the loan agreement to allow for funds to be disbursed. Once the loan agreement is signed, the primary borrower receives the principal in a lump sum.

The primary borrower is responsible for making the monthly payments on the loan. If the borrower is unable to pay then the cosigner’s obligation comes into effect. The terms of the loan agreement will provide details and specific terms on when the cosigner will be contacted. The cosigner may be immediately contacted if a payment is missed or they may only be responsible when a loan reaches default. Depending on the loan’s terms a lender may immediately begin to report payment delinquencies to credit bureaus for both the borrower and cosigner.

How Co-borrowing Works

For joint credit in a co-borrowing agreement, both borrowers receive the principal and are responsible for making the payments. Similar to cosigning, a co-borrowing loan agreement will consider both applicants in the credit application and underwriting process. Similar benefits are also available in a co-borrowing agreement.

Since the terms of the loan consider both applicants, the underwriting process is more likely to assign a lower interest rate and higher principal. Generally, both parties involved in the agreement will have rights to the principal balance. As such, both parties are responsible for repayment obligations. Co-borrowing agreements are typically most common in a mortgage loan.

How To Remove Cosigner’s Name

first of all, we do not recommend you to do cosigning if you did already and wanna correct your mistake you can do it

I know some times very important  to remove your name from someone else’s loan

because you also may need to get a loan and the bank sometimes does not approve it until another loan is clear or until your name is removed

and if the principal applicant dent not make payments of loan  or make late payments then it will also put bad impact on the credit reports of both of you

so it’s a good decision to get your name removed from the loan

for that, you (cosigner) or principal applicant must call the bank ( you guys have a loan with) and tell them that you wanna remove the cosigner’s name from the loan


they will send a request to that department and will send you a request letter in the mailbox

so please make sure when you call the bank to confirm your address if its changed update it there

once you get the letter then both of need to sign it and send it back to the bank

then they will send you a letter with confirmation of approval

please note (request it at least after 6 months from the date you get a loan and make payments on time always then they approve this request when they see that principal applicant is making payment and will make payments )

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