Co-Signer Versus Co-Buyer

Loaning money for a car can be a scary thing. All loans come with the threat of debt, and you need to make sure you’ll be able to pay everything off in time before Annual Percentage Rates go through the roof. That’s why it’s important to discuss whether you should have a co-signer or co-buyer on your auto loan, and, more importantly, what the distinction between those two terms is.

First off, a co-signer is someone who has no right to the vehicle (or whatever you’re co-signing for) itself. The co-signer merely provides the good credit score that the buyer may not have in order to prove they are capable of paying off the loan. Most people who are renting apartments use co-signers to prove they can pay the rent, and if they fail to, the co-signer is responsible for making up those payments.

A co-buyer, on the other hand, does have a right to the car/item. They’re just as much responsible for the payment as you are, but all the rights and responsibilities are also in their hands as well. That means that, if you get on bad terms with your co-buyer, a court may have to decide who the possession goes to. Putting a co-buyer on your purchase or loan has the advantage of getting you the good credit you need while also being able to manage that person’s payments.

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2 years ago
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