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If you don’t have a better credit score, you can ask your parents or a relative to apply for the loan on your behalf. The person that takes this responsibility of applying the loan is known as a Cosigner. This person is legally liable for the debt incurred.

Difference between cosigner and co-applicant

You might have read the term co-applicant while collecting some information about the cosigner. It often appears that both terms are used for the same thing. But the details show that the meaning of the co-applicant is slightly different. A cosigner is a person that takes responsibility for the loan, but they do not receive the loan personally. On the contrary, the co-applicant is the person that takes the loan personally and has full control of where to use the loan.

For instance, my wife was my co-applicant when we applied for a mortgage together because we were supposed to use this amount for buying a home for both of us. On the contrary, my parents applied for an auto loan on my behalf when I was 18 because I didn’t have the established credit. So, my parents were the cosigners because they were accepting the legal responsibility while the loan was for my car.