Cosign Definition and Legal Meaning
On this page, you'll find the legal definition and meaning of Cosign, written in plain English, along with examples of how it is used.
What is Cosign?
To sign jointly a promisoory note or any form of paper with another peson and share the responsibilty to pay the amount at the time of maturity.
History and Meaning of Cosign
Cosigning is a legal term used when two or more people sign on the same document with respect to the same transaction. The cosigner is essentially taking on a shared responsibility and legal obligation to pay the amount owed in case the primary borrower fails to pay the debt. Usually, a cosigner will sign on for someone else's debt who may have poor credit or no credit at all. When a person cosigns a note, they are essentially vouching for the borrower's credibility and ability to pay the debt.
Cosigning has been in use for many years as it has always been difficult for people with poor credit to obtain a loan. The concept of cosigning is widespread in the financial world, and many loan programs require a cosigner. The cosigner must understand the risks involved in cosigning a loan and only do so with someone they know well and trust.
Examples of Cosign
- A parent who cosigns on their child's student loan.
- A friend who cosigns on another friend's car loan.
- A partner who cosigns for their spouse's mortgage.
- A sibling who cosigns on their sibling's personal loan.
- A business partner who cosigns on a business loan.
Legal Terms Similar to Cosign
- Joint and Several Liability: This legal term means that each borrower is individually responsible for the full amount of the debt as well as sharing the responsibility with others who cosigned.
- Surety: A surety is someone who guarantees the full and timely payment of a debt by assuming liability for a primary borrower.
- Co-Borrower: Co-borrowers are someone who signs on a loan with the primary borrower, assuming equal liability for payment of the debt. The co-borrower shares the responsibility equally with the primary borrower.