How to differentiate between Co-Signer & Co-Borrower?

August 28, 2021


Co-borrower, Co-signer, Education Loan, Home loan, overseas education, Student Loan

Education loan is significant support for students dreaming of studying abroad. Today, various financial institutions offer loans to aspirants abroad and transform their dreams into reality. However, getting loan approval is not as easy as it seems. Students do face many obstacles while applying for study abroad education loans.

Students applying for a loan for higher education abroad usually opt for a co-applicant or cosigner in their debt. Most of the time, it is their parents or guardians. Moreover, an education loan is not the only category wherein one chooses a cosigner. Other loan applications such as car or property loans have higher approval chances if multiple people are part of the application process.

Usually, people blur the differentiating line between cosigner & co-borrower, considering that both have a similar role to play. However, it is not the case. In this article, insurance experts from Student Cover will define the difference between Co-Signer and Co-Borrower, elaborating on how they work and which one to choose while opting for a student loan.


Who is a Cosigner?

A cosigner is a person who becomes a guarantor of the primary borrowing person in a loan agreement, who co-signs along with the borrower taking full legal responsibility for his debt. By signing together with the primary borrower, a cosigner agrees to pay off the borrower’s debt if he cannot do so or dies due to any unfortunate event.

It gives the lender a guarantee, especially if the cosigner has a high-pay income. If one person cannot pay off the debt, the other would be legally bound to pay the entire loan amount. People usually look for a co-borrower who would support them in a time of crisis if they could not do so. Hence combining each other’s resources.

Financial Institutions are more eager to approve those loan cases with a cosigner with a good credit score. At times, it becomes beneficial to the primary borrower, helping him get a loan at low ROI (rate of interest), and accessing the option of a debt-to-income loan (DTI).

Who is a Co-Borrower?

A co-borrower plays a similar role as a cosigner, combining resources with another person to buy an asset or commencing a joint venture. A co-borrower then becomes a joint owner of an acquisition or venture because he has borrowed money for something he has bought. So, in other words, they have a shared debt with other borrowers in the loan agreement, and they would be paying the loan together.


What is the primary line of difference between Co-Signer and Co-Borrower?

After defining both terminologies separately, it is best to compare them and understand which would be the best option to go with while applying for a loan.

Let us figure out how can they be differentiated from each other:


  • Only legally bound to pay the debt when the primary borrower cannot pay it due to any unforeseen event or low income.
  • Only a guarantor of a primary borrower
  • He is not rightfully the owner of a property; only the borrower is.
  • A cosigner takes a debt/loan only to help the borrower, and there is no common purpose for the same.
  • There is no benefit for a cosigner to become a guarantor of the primary borrower. Instead, it might become an obstacle for the cosigner while opting for a loan. Being a guarantor in a loan would mean that his credit score would be low whenever he opts for a loan.


  • Jointly responsible for paying off the debt amount since all co-borrowers in a loan agreement have a joint asset or purpose of taking a loan.
  • A rightful owner of the property or asset.
  • They have a direct benefit from the funds received by applying for a loan.

Which is best for you- Being a Cosigner or Co-Borrower?

A good line stretches long between cosigner and co-borrower, clarifying what person plays which role while opting for a loan. However, the thing is, it is also essential to make the right decision and know to choose which option would be beneficial while opting for a loan.

You can always co-sign for a person’s loan application to help them get approval and become a guarantor. Nevertheless, if the primary borrower becomes a defaulter, a cosigner has to pay the debt off. Otherwise, it could ruin the financial reputation in a loan market. Cosigning is good unless the primary borrower completely misuses the role and disagrees to pay the loan debt.

Making it clear by all the parties that the primary borrower would be the only person paying off the debt could prove to co-sign a better practice.

Co-borrowing could be a good practice only when two people buy a house, car, or commencing a business together.


Let’s Wrap Up!

Understanding these differences is crucial as it would make one clear of their right and responsibilities. Hence disabling the circumstances of misusing their role. Being a co-borrower and borrowing money could be a choice. Nevertheless, while one co-signs for loan approval for someone, know that there would be certain limitations in the future.

For more such info, visit Reach out to us at, to know more about Student Cover student loan options.

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